Correlation Between VULCAN MATERIALS and Byggmax Group

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

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

Diversification Opportunities for VULCAN MATERIALS and Byggmax Group

0.5

Correlation Coefficient

VULCAN MATERIALS  Byggmax Group

Very weak diversification

The 3 months correlation between VULCAN and Byggmax is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Byggmax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggmax Group AB and VULCAN MATERIALS 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 VULCAN MATERIALS are associated (or correlated) with Byggmax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggmax Group AB has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Byggmax Group go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Byggmax Group

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to under-perform the Byggmax Group. But the stock apears to be less risky and, when comparing its historical volatility, VULCAN MATERIALS is 1.53 times less risky than Byggmax Group. The stock trades about -0.28 of its potential returns per unit of risk. The Byggmax Group AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Byggmax Group AB on September 23, 2024 and sell it today you would earn a total of  19.00  from holding Byggmax Group AB or generate 5.22% return on investment over 90 days.

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

VULCAN MATERIALS  vs.  Byggmax Group AB

VULCAN MATERIALS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VULCAN MATERIALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Byggmax Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Byggmax Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Byggmax Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VULCAN MATERIALS and Byggmax Group

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

The idea behind VULCAN MATERIALS and Byggmax 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.