Correlation Between Mekonomen and Bilia AB

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

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

Diversification Opportunities for Mekonomen and Bilia AB

-0.02

Correlation Coefficient

Mekonomen  Bilia AB

Good diversification

The 3 months correlation between Mekonomen and Bilia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Bilia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilia AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with Bilia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilia AB has no effect on the direction of Mekonomen i.e., Mekonomen and Bilia AB go up and down completely randomly.

Pair Corralation between Mekonomen and Bilia AB

Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.99 times more return on investment than Bilia AB. However, Mekonomen AB is 1.01 times less risky than Bilia AB. It trades about 0.06 of its potential returns per unit of risk. Bilia AB is currently generating about 0.05 per unit of risk. If you would invest  13,020  in Mekonomen AB on September 15, 2024 and sell it today you would earn a total of  720.00  from holding Mekonomen AB or generate 5.53% return on investment over 90 days.

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

Mekonomen AB  vs.  Bilia AB

Mekonomen AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bilia AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bilia AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Bilia AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mekonomen and Bilia AB

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

The idea behind Mekonomen AB and Bilia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.