Correlation Between Maha Energy and Bambuser

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

Diversification Opportunities for Maha Energy and Bambuser

0.54

Correlation Coefficient

Maha Energy  Bambuser

Very weak diversification

The 3 months correlation between Maha and Bambuser is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Maha Energy AB and Bambuser AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bambuser 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 Bambuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bambuser AB has no effect on the direction of Maha Energy i.e., Maha Energy and Bambuser go up and down completely randomly.

Pair Corralation between Maha Energy and Bambuser

Assuming the 90 days trading horizon Maha Energy AB is expected to under-perform the Bambuser. But the stock apears to be less risky and, when comparing its historical volatility, Maha Energy AB is 2.02 times less risky than Bambuser. The stock trades about -0.14 of its potential returns per unit of risk. The Bambuser AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Bambuser AB on December 29, 2024 and sell it today you would lose (2.00) from holding Bambuser AB or give up 3.39% of portfolio value over 90 days.

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

Maha Energy AB  vs.  Bambuser AB

Maha Energy AB

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bambuser AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bambuser AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bambuser may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Maha Energy and Bambuser

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

The idea behind Maha Energy AB and Bambuser 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.