Correlation Between GomSpace Group and Beijer Ref

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

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

Diversification Opportunities for GomSpace Group and Beijer Ref

0.49

Correlation Coefficient

GomSpace Group  Beijer Ref

Very weak diversification

The 3 months correlation between GomSpace and Beijer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GomSpace Group AB and Beijer Ref AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Ref AB and GomSpace 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 GomSpace Group AB are associated (or correlated) with Beijer Ref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Ref AB has no effect on the direction of GomSpace Group i.e., GomSpace Group and Beijer Ref go up and down completely randomly.

Pair Corralation between GomSpace Group and Beijer Ref

Assuming the 90 days trading horizon GomSpace Group AB is expected to under-perform the Beijer Ref. In addition to that, GomSpace Group is 2.4 times more volatile than Beijer Ref AB. It trades about -0.25 of its total potential returns per unit of risk. Beijer Ref AB is currently generating about -0.55 per unit of volatility. If you would invest  17,025  in Beijer Ref AB on October 13, 2024 and sell it today you would lose (1,930) from holding Beijer Ref AB or give up 11.34% of portfolio value over 90 days.

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

GomSpace Group AB  vs.  Beijer Ref AB

GomSpace Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GomSpace Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GomSpace Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Beijer Ref AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Ref AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GomSpace Group and Beijer Ref

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

The idea behind GomSpace Group AB and Beijer Ref 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .