Correlation Between Beijer Alma and AQ Group

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

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

Diversification Opportunities for Beijer Alma and AQ Group

-0.69

Correlation Coefficient

Beijer Alma  AQ Group

Excellent diversification

The 3 months correlation between Beijer and AQ Group is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Alma AB and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB and Beijer Alma 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 Beijer Alma AB are associated (or correlated) with AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Beijer Alma i.e., Beijer Alma and AQ Group go up and down completely randomly.

Pair Corralation between Beijer Alma and AQ Group

Assuming the 90 days trading horizon Beijer Alma AB is expected to under-perform the AQ Group. But the stock apears to be less risky and, when comparing its historical volatility, Beijer Alma AB is 1.5 times less risky than AQ Group. The stock trades about -0.08 of its potential returns per unit of risk. The AQ Group AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,740  in AQ Group AB on September 5, 2024 and sell it today you would earn a total of  1,584  from holding AQ Group AB or generate 12.43% return on investment over 90 days.

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

Beijer Alma AB  vs.  AQ Group AB

Beijer Alma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Alma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AQ Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AQ Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AQ Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijer Alma and AQ Group

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

The idea behind Beijer Alma AB and AQ 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .