Correlation Between Strategic Investments and Brockhaus Capital

Can any of the company-specific risk be diversified away by investing in both Strategic Investments and Brockhaus Capital 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 Strategic Investments and Brockhaus Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strategic Investments AS and Brockhaus Capital Management, you can compare the effects of market volatilities on Strategic Investments and Brockhaus Capital 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 Strategic Investments with a short position of Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Brockhaus Capital.

Diversification Opportunities for Strategic Investments and Brockhaus Capital

0.52

Correlation Coefficient

Strategic Investments  Brockhaus Capital

Very weak diversification

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

Pair Corralation between Strategic Investments and Brockhaus Capital

Assuming the 90 days horizon Strategic Investments AS is expected to generate 2.4 times more return on investment than Brockhaus Capital. However, Strategic Investments is 2.4 times more volatile than Brockhaus Capital Management. It trades about 0.02 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.11 per unit of risk. If you would invest  14.00  in Strategic Investments AS on December 29, 2024 and sell it today you would lose (1.00) from holding Strategic Investments AS or give up 7.14% of portfolio value over 90 days.

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

Strategic Investments AS  vs.  Brockhaus Capital Management

Strategic Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Strategic Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brockhaus Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Strategic Investments and Brockhaus Capital

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

The idea behind Strategic Investments AS and Brockhaus Capital Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.