Correlation Between Clean Motion and Boliden AB

Can any of the company-specific risk be diversified away by investing in both Clean Motion and Boliden AB 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 Clean Motion and Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Motion AB and Boliden AB, you can compare the effects of market volatilities on Clean Motion and Boliden AB 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 Clean Motion with a short position of Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Motion and Boliden AB.

Diversification Opportunities for Clean Motion and Boliden AB

-0.52

Correlation Coefficient

Clean Motion  Boliden AB

Excellent diversification

The 3 months correlation between Clean and Boliden is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Clean Motion AB and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB and Clean Motion 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 Clean Motion AB are associated (or correlated) with Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of Clean Motion i.e., Clean Motion and Boliden AB go up and down completely randomly.

Pair Corralation between Clean Motion and Boliden AB

Assuming the 90 days trading horizon Clean Motion AB is expected to under-perform the Boliden AB. In addition to that, Clean Motion is 3.04 times more volatile than Boliden AB. It trades about -0.16 of its total potential returns per unit of risk. Boliden AB is currently generating about 0.11 per unit of volatility. If you would invest  29,110  in Boliden AB on September 4, 2024 and sell it today you would earn a total of  3,720  from holding Boliden AB or generate 12.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Clean Motion AB  vs.  Boliden AB

Clean Motion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Motion AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Boliden AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Boliden AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Motion and Boliden AB

The main advantage of trading using opposite Clean Motion and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Motion position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB's long position.

The idea behind Clean Motion AB and Boliden AB 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.