Correlation Between Byggmax Group and Lowes Companies

Can any of the company-specific risk be diversified away by investing in both Byggmax Group and Lowes Companies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Byggmax Group and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byggmax Group AB and Lowes Companies, you can compare the effects of market volatilities on Byggmax Group and Lowes Companies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Byggmax Group with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggmax Group and Lowes Companies.

Diversification Opportunities for Byggmax Group and Lowes Companies

-0.58

Correlation Coefficient

Byggmax Group  Lowes Companies

Excellent diversification

The 3 months correlation between Byggmax and Lowes is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Byggmax Group AB and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Byggmax Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Byggmax Group AB are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Byggmax Group i.e., Byggmax Group and Lowes Companies go up and down completely randomly.

Pair Corralation between Byggmax Group and Lowes Companies

Assuming the 90 days horizon Byggmax Group AB is expected to generate 1.48 times more return on investment than Lowes Companies. However, Byggmax Group is 1.48 times more volatile than Lowes Companies. It trades about 0.15 of its potential returns per unit of risk. Lowes Companies is currently generating about -0.08 per unit of risk. If you would invest  386.00  in Byggmax Group AB on December 29, 2024 and sell it today you would earn a total of  88.00  from holding Byggmax Group AB or generate 22.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Byggmax Group AB  vs.  Lowes Companies

Byggmax Group AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Byggmax Group AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Byggmax Group reported solid returns over the last few months and may actually be approaching a breakup point.

Lowes Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lowes Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Byggmax Group and Lowes Companies

The main advantage of trading using opposite Byggmax Group and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggmax Group position performs unexpectedly, Lowes Companies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lowes Companies will offset losses from the drop in Lowes Companies' long position.

The idea behind Byggmax Group AB and Lowes Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.