Correlation Between Maha Energy and Beijer Ref

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

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

Diversification Opportunities for Maha Energy and Beijer Ref

0.39

Correlation Coefficient

Maha Energy  Beijer Ref

Weak diversification

The 3 months correlation between Maha and Beijer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Maha Energy 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 Maha Energy 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 Maha Energy 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 Maha Energy i.e., Maha Energy and Beijer Ref go up and down completely randomly.

Pair Corralation between Maha Energy and Beijer Ref

Assuming the 90 days trading horizon Maha Energy AB is expected to under-perform the Beijer Ref. In addition to that, Maha Energy is 1.05 times more volatile than Beijer Ref AB. It trades about -0.02 of its total potential returns per unit of risk. Beijer Ref AB is currently generating about 0.03 per unit of volatility. If you would invest  13,892  in Beijer Ref AB on September 24, 2024 and sell it today you would earn a total of  2,698  from holding Beijer Ref AB or generate 19.42% return on investment over 90 days.

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

Maha Energy AB  vs.  Beijer Ref AB

Maha Energy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maha Energy AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 somewhat strong forward indicators, Beijer Ref is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maha Energy and Beijer Ref

The main advantage of trading using opposite Maha Energy and Beijer Ref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maha Energy 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 Maha Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.