Correlation Between Bonheur and Everfuel

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

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

Diversification Opportunities for Bonheur and Everfuel

0.12

Correlation Coefficient

Bonheur  Everfuel

Average diversification

The 3 months correlation between Bonheur and Everfuel is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bonheur and Everfuel AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everfuel AS and Bonheur 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 Bonheur are associated (or correlated) with Everfuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everfuel AS has no effect on the direction of Bonheur i.e., Bonheur and Everfuel go up and down completely randomly.

Pair Corralation between Bonheur and Everfuel

Assuming the 90 days trading horizon Bonheur is expected to under-perform the Everfuel. In addition to that, Bonheur is 1.48 times more volatile than Everfuel AS. It trades about -0.02 of its total potential returns per unit of risk. Everfuel AS is currently generating about 0.01 per unit of volatility. If you would invest  1,288  in Everfuel AS on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Everfuel AS or generate 0.31% return on investment over 90 days.

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

Bonheur  vs.  Everfuel AS

Bonheur

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonheur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bonheur is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Everfuel AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everfuel AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Everfuel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bonheur and Everfuel

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

The idea behind Bonheur and Everfuel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.