Correlation Between Bure Equity and Creades AB

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

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

Diversification Opportunities for Bure Equity and Creades AB

0.32

Correlation Coefficient

Bure Equity  Creades AB

Weak diversification

The 3 months correlation between Bure and Creades is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bure Equity AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades AB and Bure Equity 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 Bure Equity 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 Bure Equity i.e., Bure Equity and Creades AB go up and down completely randomly.

Pair Corralation between Bure Equity and Creades AB

Assuming the 90 days trading horizon Bure Equity AB is expected to under-perform the Creades AB. But the stock apears to be less risky and, when comparing its historical volatility, Bure Equity AB is 1.22 times less risky than Creades AB. The stock trades about -0.08 of its potential returns per unit of risk. The Creades AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,076  in Creades AB on September 4, 2024 and sell it today you would earn a total of  24.00  from holding Creades AB or generate 0.34% return on investment over 90 days.

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

Bure Equity AB  vs.  Creades AB

Bure Equity AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bure Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm 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 Bure Equity and Creades AB

The main advantage of trading using opposite Bure Equity and Creades AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bure Equity 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 Bure Equity 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..