Correlation Between BE Group and TradeDoubler

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

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

Diversification Opportunities for BE Group and TradeDoubler

-0.42

Correlation Coefficient

BE Group  TradeDoubler

Very good diversification

The 3 months correlation between BEGR and TradeDoubler is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and TradeDoubler AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradeDoubler AB and BE Group 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 BE Group AB are associated (or correlated) with TradeDoubler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradeDoubler AB has no effect on the direction of BE Group i.e., BE Group and TradeDoubler go up and down completely randomly.

Pair Corralation between BE Group and TradeDoubler

Assuming the 90 days trading horizon BE Group AB is expected to under-perform the TradeDoubler. But the stock apears to be less risky and, when comparing its historical volatility, BE Group AB is 1.44 times less risky than TradeDoubler. The stock trades about -0.08 of its potential returns per unit of risk. The TradeDoubler AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  367.00  in TradeDoubler AB on September 3, 2024 and sell it today you would lose (17.00) from holding TradeDoubler AB or give up 4.63% of portfolio value over 90 days.

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

BE Group AB  vs.  TradeDoubler AB

BE Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TradeDoubler AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BE Group and TradeDoubler

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

The idea behind BE Group AB and TradeDoubler 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.