Correlation Between Nederman Holding and BTS Group

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

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

Diversification Opportunities for Nederman Holding and BTS Group

0.4

Correlation Coefficient

Nederman Holding  BTS Group

Very weak diversification

The 3 months correlation between Nederman and BTS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nederman Holding AB and BTS Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group AB and Nederman Holding 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 Nederman Holding AB are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group AB has no effect on the direction of Nederman Holding i.e., Nederman Holding and BTS Group go up and down completely randomly.

Pair Corralation between Nederman Holding and BTS Group

Assuming the 90 days trading horizon Nederman Holding AB is expected to under-perform the BTS Group. In addition to that, Nederman Holding is 1.33 times more volatile than BTS Group AB. It trades about -0.01 of its total potential returns per unit of risk. BTS Group AB is currently generating about 0.03 per unit of volatility. If you would invest  26,300  in BTS Group AB on December 30, 2024 and sell it today you would earn a total of  600.00  from holding BTS Group AB or generate 2.28% return on investment over 90 days.

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

Nederman Holding AB  vs.  BTS Group AB

Nederman Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nederman Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nederman Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BTS Group AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BTS Group 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 Nederman Holding and BTS Group

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

The idea behind Nederman Holding AB and BTS 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 Transaction History module to view history of all your transactions and understand their impact on performance.