Correlation Between Karnov Group and Beijer Ref

Can any of the company-specific risk be diversified away by investing in both Karnov 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 Karnov 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 Karnov Group AB and Beijer Ref AB, you can compare the effects of market volatilities on Karnov 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 Karnov Group with a short position of Beijer Ref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karnov Group and Beijer Ref.

Diversification Opportunities for Karnov Group and Beijer Ref

-0.08

Correlation Coefficient

Karnov Group  Beijer Ref

Good diversification

The 3 months correlation between Karnov and Beijer is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Karnov 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 Karnov 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 Karnov 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 Karnov Group i.e., Karnov Group and Beijer Ref go up and down completely randomly.

Pair Corralation between Karnov Group and Beijer Ref

Assuming the 90 days trading horizon Karnov Group AB is expected to generate 0.74 times more return on investment than Beijer Ref. However, Karnov Group AB is 1.36 times less risky than Beijer Ref. It trades about 0.06 of its potential returns per unit of risk. Beijer Ref AB is currently generating about 0.01 per unit of risk. If you would invest  7,650  in Karnov Group AB on September 3, 2024 and sell it today you would earn a total of  470.00  from holding Karnov Group AB or generate 6.14% return on investment over 90 days.

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

Karnov Group AB  vs.  Beijer Ref AB

Karnov Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Karnov Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Beijer Ref AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijer Ref AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Beijer Ref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Karnov Group and Beijer Ref

The main advantage of trading using opposite Karnov Group and Beijer Ref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karnov 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 Karnov 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.