Correlation Between Clas Ohlson and Bilia AB

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

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

Diversification Opportunities for Clas Ohlson and Bilia AB

0.63

Correlation Coefficient

Clas Ohlson  Bilia AB

Poor diversification

The 3 months correlation between Clas and Bilia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clas Ohlson AB and Bilia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilia AB and Clas Ohlson 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 Clas Ohlson AB are associated (or correlated) with Bilia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilia AB has no effect on the direction of Clas Ohlson i.e., Clas Ohlson and Bilia AB go up and down completely randomly.

Pair Corralation between Clas Ohlson and Bilia AB

Assuming the 90 days trading horizon Clas Ohlson AB is expected to generate 0.92 times more return on investment than Bilia AB. However, Clas Ohlson AB is 1.09 times less risky than Bilia AB. It trades about 0.28 of its potential returns per unit of risk. Bilia AB is currently generating about 0.01 per unit of risk. If you would invest  15,388  in Clas Ohlson AB on September 4, 2024 and sell it today you would earn a total of  4,772  from holding Clas Ohlson AB or generate 31.01% return on investment over 90 days.

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

Clas Ohlson AB  vs.  Bilia AB

Clas Ohlson AB

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clas Ohlson AB are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clas Ohlson sustained solid returns over the last few months and may actually be approaching a breakup point.

Bilia AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Clas Ohlson and Bilia AB

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

The idea behind Clas Ohlson AB and Bilia 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.