Correlation Between NIBE Industrier and Bravida Holding

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

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

Diversification Opportunities for NIBE Industrier and Bravida Holding

-0.29

Correlation Coefficient

NIBE Industrier  Bravida Holding

Very good diversification

The 3 months correlation between NIBE and Bravida is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and Bravida Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravida Holding AB and NIBE Industrier 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 NIBE Industrier AB are associated (or correlated) with Bravida Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravida Holding AB has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and Bravida Holding go up and down completely randomly.

Pair Corralation between NIBE Industrier and Bravida Holding

Assuming the 90 days trading horizon NIBE Industrier AB is expected to under-perform the Bravida Holding. In addition to that, NIBE Industrier is 1.44 times more volatile than Bravida Holding AB. It trades about -0.33 of its total potential returns per unit of risk. Bravida Holding AB is currently generating about -0.04 per unit of volatility. If you would invest  8,040  in Bravida Holding AB on September 24, 2024 and sell it today you would lose (110.00) from holding Bravida Holding AB or give up 1.37% of portfolio value over 90 days.

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

NIBE Industrier AB  vs.  Bravida Holding AB

NIBE Industrier AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIBE Industrier 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bravida Holding AB

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with NIBE Industrier and Bravida Holding

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

The idea behind NIBE Industrier AB and Bravida Holding 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.