Correlation Between Karnov Group and BHG Group

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

Diversification Opportunities for Karnov Group and BHG Group

0.39

Correlation Coefficient

Karnov Group  BHG Group

Weak diversification

The 3 months correlation between Karnov and BHG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Karnov Group AB and BHG Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHG Group 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 BHG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHG Group AB has no effect on the direction of Karnov Group i.e., Karnov Group and BHG Group go up and down completely randomly.

Pair Corralation between Karnov Group and BHG Group

Assuming the 90 days trading horizon Karnov Group is expected to generate 31.99 times less return on investment than BHG Group. But when comparing it to its historical volatility, Karnov Group AB is 2.95 times less risky than BHG Group. It trades about 0.01 of its potential returns per unit of risk. BHG Group AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,766  in BHG Group AB on September 24, 2024 and sell it today you would earn a total of  122.00  from holding BHG Group AB or generate 6.91% return on investment over 90 days.

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

Karnov Group AB  vs.  BHG Group AB

Karnov Group AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Karnov Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BHG Group AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BHG Group AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, BHG Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Karnov Group and BHG Group

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

The idea behind Karnov Group AB and BHG Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.