Correlation Between Duni AB and Beijer Alma

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

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

Diversification Opportunities for Duni AB and Beijer Alma

-0.21

Correlation Coefficient

Duni AB  Beijer Alma

Very good diversification

The 3 months correlation between Duni and Beijer is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Duni AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB and Duni AB 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 Duni AB are associated (or correlated) with Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of Duni AB i.e., Duni AB and Beijer Alma go up and down completely randomly.

Pair Corralation between Duni AB and Beijer Alma

Assuming the 90 days trading horizon Duni AB is expected to generate 0.85 times more return on investment than Beijer Alma. However, Duni AB is 1.18 times less risky than Beijer Alma. It trades about 0.02 of its potential returns per unit of risk. Beijer Alma AB is currently generating about -0.02 per unit of risk. If you would invest  8,429  in Duni AB on October 25, 2024 and sell it today you would earn a total of  1,081  from holding Duni AB or generate 12.82% return on investment over 90 days.

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

Duni AB  vs.  Beijer Alma AB

Duni AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duni AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Duni AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Beijer Alma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Alma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Beijer Alma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Duni AB and Beijer Alma

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

The idea behind Duni AB and Beijer Alma 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..