Correlation Between Beijer Alma and Catella AB

Can any of the company-specific risk be diversified away by investing in both Beijer Alma and Catella AB 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 Catella AB 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 Catella AB A, you can compare the effects of market volatilities on Beijer Alma and Catella AB 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 Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijer Alma and Catella AB.

Diversification Opportunities for Beijer Alma and Catella AB

0.71

Correlation Coefficient

Beijer Alma  Catella AB

Poor diversification

The 3 months correlation between Beijer and Catella is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Alma AB and Catella AB A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB A 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 Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB A has no effect on the direction of Beijer Alma i.e., Beijer Alma and Catella AB go up and down completely randomly.

Pair Corralation between Beijer Alma and Catella AB

Assuming the 90 days trading horizon Beijer Alma AB is expected to generate 0.6 times more return on investment than Catella AB. However, Beijer Alma AB is 1.66 times less risky than Catella AB. It trades about -0.11 of its potential returns per unit of risk. Catella AB A is currently generating about -0.07 per unit of risk. If you would invest  19,400  in Beijer Alma AB on September 4, 2024 and sell it today you would lose (2,080) from holding Beijer Alma AB or give up 10.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Beijer Alma AB  vs.  Catella AB A

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 weak 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.

Catella AB A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catella AB A 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.

Pair Trading with Beijer Alma and Catella AB

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

The idea behind Beijer Alma AB and Catella AB A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.