Correlation Between Bewi Asa and Masoval AS

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

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

Diversification Opportunities for Bewi Asa and Masoval AS

0.74

Correlation Coefficient

Bewi Asa  Masoval AS

Poor diversification

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

Pair Corralation between Bewi Asa and Masoval AS

Assuming the 90 days trading horizon Bewi Asa is expected to under-perform the Masoval AS. In addition to that, Bewi Asa is 1.52 times more volatile than Masoval AS. It trades about -0.02 of its total potential returns per unit of risk. Masoval AS is currently generating about 0.0 per unit of volatility. If you would invest  2,909  in Masoval AS on September 14, 2024 and sell it today you would lose (169.00) from holding Masoval AS or give up 5.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Bewi Asa  vs.  Masoval AS

Bewi Asa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bewi Asa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Bewi Asa is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Masoval AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masoval AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bewi Asa and Masoval AS

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

The idea behind Bewi Asa and Masoval AS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.