Correlation Between Bonesupport Holding and IZafe Group

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

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

Diversification Opportunities for Bonesupport Holding and IZafe Group

0.2

Correlation Coefficient

Bonesupport Holding  IZafe Group

Modest diversification

The 3 months correlation between Bonesupport and IZafe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bonesupport Holding AB and iZafe Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iZafe Group AB and Bonesupport Holding 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 Bonesupport Holding AB are associated (or correlated) with IZafe Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iZafe Group AB has no effect on the direction of Bonesupport Holding i.e., Bonesupport Holding and IZafe Group go up and down completely randomly.

Pair Corralation between Bonesupport Holding and IZafe Group

Assuming the 90 days trading horizon Bonesupport Holding AB is expected to generate 0.52 times more return on investment than IZafe Group. However, Bonesupport Holding AB is 1.93 times less risky than IZafe Group. It trades about 0.08 of its potential returns per unit of risk. iZafe Group AB is currently generating about 0.01 per unit of risk. If you would invest  31,420  in Bonesupport Holding AB on September 15, 2024 and sell it today you would earn a total of  3,940  from holding Bonesupport Holding AB or generate 12.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Bonesupport Holding AB  vs.  iZafe Group AB

Bonesupport Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bonesupport Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

iZafe Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bonesupport Holding and IZafe Group

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

The idea behind Bonesupport Holding AB and iZafe 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.