Correlation Between Stalprodukt and Biztech Konsulting

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

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

Diversification Opportunities for Stalprodukt and Biztech Konsulting

-0.6

Correlation Coefficient

Stalprodukt  Biztech Konsulting

Excellent diversification

The 3 months correlation between Stalprodukt and Biztech is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Stalprodukt SA and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting and Stalprodukt 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 Stalprodukt SA are associated (or correlated) with Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of Stalprodukt i.e., Stalprodukt and Biztech Konsulting go up and down completely randomly.

Pair Corralation between Stalprodukt and Biztech Konsulting

Assuming the 90 days trading horizon Stalprodukt SA is expected to under-perform the Biztech Konsulting. But the stock apears to be less risky and, when comparing its historical volatility, Stalprodukt SA is 4.58 times less risky than Biztech Konsulting. The stock trades about -0.1 of its potential returns per unit of risk. The Biztech Konsulting SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Biztech Konsulting SA on September 23, 2024 and sell it today you would earn a total of  4.00  from holding Biztech Konsulting SA or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Stalprodukt SA  vs.  Biztech Konsulting SA

Stalprodukt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stalprodukt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Biztech Konsulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biztech Konsulting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biztech Konsulting reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stalprodukt and Biztech Konsulting

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

The idea behind Stalprodukt SA and Biztech Konsulting SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.