Correlation Between Beijer Alma and Lindab International

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

Diversification Opportunities for Beijer Alma and Lindab International

0.74

Correlation Coefficient

Beijer Alma  Lindab International

Poor diversification

The 3 months correlation between Beijer and Lindab is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Alma AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Beijer Alma i.e., Beijer Alma and Lindab International go up and down completely randomly.

Pair Corralation between Beijer Alma and Lindab International

Assuming the 90 days trading horizon Beijer Alma AB is expected to generate 0.61 times more return on investment than Lindab International. However, Beijer Alma AB is 1.63 times less risky than Lindab International. It trades about -0.11 of its potential returns per unit of risk. Lindab International AB 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.  Lindab International 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 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.

Lindab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindab International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Lindab International

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

The idea behind Beijer Alma AB and Lindab International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.