Correlation Between Boliden AB and Creades AB

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

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

Diversification Opportunities for Boliden AB and Creades AB

0.68

Correlation Coefficient

Boliden AB  Creades AB

Poor diversification

The 3 months correlation between Boliden and Creades is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades AB and Boliden AB 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 Boliden AB are associated (or correlated) with Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of Boliden AB i.e., Boliden AB and Creades AB go up and down completely randomly.

Pair Corralation between Boliden AB and Creades AB

Assuming the 90 days trading horizon Boliden AB is expected to generate 1.37 times less return on investment than Creades AB. In addition to that, Boliden AB is 1.02 times more volatile than Creades AB. It trades about 0.0 of its total potential returns per unit of risk. Creades AB is currently generating about 0.0 per unit of volatility. If you would invest  7,627  in Creades AB on September 2, 2024 and sell it today you would lose (582.00) from holding Creades AB or give up 7.63% of portfolio value over 90 days.

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

Boliden AB  vs.  Creades AB

Boliden AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Boliden AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Creades AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creades AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Creades AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boliden AB and Creades AB

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

The idea behind Boliden AB and Creades 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.