Correlation Between Bure Equity and Sectra AB

Can any of the company-specific risk be diversified away by investing in both Bure Equity and Sectra 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 Sectra 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 Sectra AB, you can compare the effects of market volatilities on Bure Equity and Sectra 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 Sectra AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bure Equity and Sectra AB.

Diversification Opportunities for Bure Equity and Sectra AB

-0.47

Correlation Coefficient

Bure Equity  Sectra AB

Very good diversification

The 3 months correlation between Bure and Sectra is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bure Equity AB and Sectra AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sectra 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 Sectra AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sectra AB has no effect on the direction of Bure Equity i.e., Bure Equity and Sectra AB go up and down completely randomly.

Pair Corralation between Bure Equity and Sectra AB

Assuming the 90 days trading horizon Bure Equity AB is expected to under-perform the Sectra AB. But the stock apears to be less risky and, when comparing its historical volatility, Bure Equity AB is 1.01 times less risky than Sectra AB. The stock trades about -0.09 of its potential returns per unit of risk. The Sectra AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  23,800  in Sectra AB on September 4, 2024 and sell it today you would earn a total of  5,245  from holding Sectra AB or generate 22.04% return on investment over 90 days.

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

Bure Equity AB  vs.  Sectra 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.

Sectra AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sectra AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Sectra AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bure Equity and Sectra AB

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

The idea behind Bure Equity AB and Sectra 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.