Correlation Between Stille AB and BICO Group

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

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

Diversification Opportunities for Stille AB and BICO Group

0.41

Correlation Coefficient

Stille AB  BICO Group

Very weak diversification

The 3 months correlation between Stille and BICO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and BICO Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICO Group AB and Stille AB 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 Stille AB are associated (or correlated) with BICO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICO Group AB has no effect on the direction of Stille AB i.e., Stille AB and BICO Group go up and down completely randomly.

Pair Corralation between Stille AB and BICO Group

Assuming the 90 days trading horizon Stille AB is expected to generate 1.5 times less return on investment than BICO Group. But when comparing it to its historical volatility, Stille AB is 1.18 times less risky than BICO Group. It trades about 0.06 of its potential returns per unit of risk. BICO Group AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,214  in BICO Group AB on December 1, 2024 and sell it today you would earn a total of  450.00  from holding BICO Group AB or generate 14.0% return on investment over 90 days.

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

Stille AB  vs.  BICO Group AB

Stille AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stille AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Stille AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

BICO Group AB

Risk-Adjusted Performance

Modest

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

Pair Trading with Stille AB and BICO Group

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

The idea behind Stille AB and BICO 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..