Correlation Between Generic Sweden and BIMobject

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

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

Diversification Opportunities for Generic Sweden and BIMobject

0.03

Correlation Coefficient

Generic Sweden  BIMobject

Significant diversification

The 3 months correlation between Generic and BIMobject is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and BIMobject AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIMobject AB and Generic Sweden 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 Generic Sweden publ are associated (or correlated) with BIMobject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIMobject AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and BIMobject go up and down completely randomly.

Pair Corralation between Generic Sweden and BIMobject

Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 1.03 times more return on investment than BIMobject. However, Generic Sweden is 1.03 times more volatile than BIMobject AB. It trades about 0.35 of its potential returns per unit of risk. BIMobject AB is currently generating about 0.23 per unit of risk. If you would invest  5,060  in Generic Sweden publ on October 13, 2024 and sell it today you would earn a total of  660.00  from holding Generic Sweden publ or generate 13.04% return on investment over 90 days.

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

Generic Sweden publ  vs.  BIMobject AB

Generic Sweden publ

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Generic Sweden unveiled solid returns over the last few months and may actually be approaching a breakup point.

BIMobject AB

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIMobject AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, BIMobject may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Generic Sweden and BIMobject

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

The idea behind Generic Sweden publ and BIMobject 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..