Correlation Between Soder Sportfiske and Beowulf Mining

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

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

Diversification Opportunities for Soder Sportfiske and Beowulf Mining

0.37

Correlation Coefficient

Soder Sportfiske  Beowulf Mining

Weak diversification

The 3 months correlation between Soder and Beowulf is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Soder Sportfiske AB and Beowulf Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining PLC and Soder Sportfiske 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 Soder Sportfiske AB are associated (or correlated) with Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining PLC has no effect on the direction of Soder Sportfiske i.e., Soder Sportfiske and Beowulf Mining go up and down completely randomly.

Pair Corralation between Soder Sportfiske and Beowulf Mining

Assuming the 90 days trading horizon Soder Sportfiske is expected to generate 3.24 times less return on investment than Beowulf Mining. But when comparing it to its historical volatility, Soder Sportfiske AB is 1.82 times less risky than Beowulf Mining. It trades about 0.07 of its potential returns per unit of risk. Beowulf Mining PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Beowulf Mining PLC on December 23, 2024 and sell it today you would earn a total of  87.00  from holding Beowulf Mining PLC or generate 47.54% return on investment over 90 days.

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

Soder Sportfiske AB  vs.  Beowulf Mining PLC

Soder Sportfiske

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Soder Sportfiske AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Soder Sportfiske unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beowulf Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beowulf Mining PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Beowulf Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soder Sportfiske and Beowulf Mining

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

The idea behind Soder Sportfiske AB and Beowulf Mining PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.