Correlation Between Bravida Holding and Instalco Intressenter

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

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

Diversification Opportunities for Bravida Holding and Instalco Intressenter

-0.16

Correlation Coefficient

Bravida Holding  Instalco Intressenter

Good diversification

The 3 months correlation between Bravida and Instalco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Instalco Intressenter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instalco Intressenter and Bravida 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 Bravida Holding AB are associated (or correlated) with Instalco Intressenter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instalco Intressenter has no effect on the direction of Bravida Holding i.e., Bravida Holding and Instalco Intressenter go up and down completely randomly.

Pair Corralation between Bravida Holding and Instalco Intressenter

Assuming the 90 days trading horizon Bravida Holding AB is expected to generate 0.58 times more return on investment than Instalco Intressenter. However, Bravida Holding AB is 1.71 times less risky than Instalco Intressenter. It trades about -0.04 of its potential returns per unit of risk. Instalco Intressenter AB is currently generating about -0.23 per unit of risk. If you would invest  8,205  in Bravida Holding AB on August 31, 2024 and sell it today you would lose (325.00) from holding Bravida Holding AB or give up 3.96% of portfolio value over 90 days.

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

Bravida Holding AB  vs.  Instalco Intressenter AB

Bravida Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bravida Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bravida Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Instalco Intressenter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instalco Intressenter AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bravida Holding and Instalco Intressenter

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

The idea behind Bravida Holding AB and Instalco Intressenter 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.