Correlation Between GomSpace Group and Beijer Alma

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

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

Diversification Opportunities for GomSpace Group and Beijer Alma

0.61

Correlation Coefficient

GomSpace Group  Beijer Alma

Poor diversification

The 3 months correlation between GomSpace and Beijer is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GomSpace Group AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB and GomSpace Group 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 GomSpace Group AB are associated (or correlated) with Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of GomSpace Group i.e., GomSpace Group and Beijer Alma go up and down completely randomly.

Pair Corralation between GomSpace Group and Beijer Alma

Assuming the 90 days trading horizon GomSpace Group AB is expected to generate 2.05 times more return on investment than Beijer Alma. However, GomSpace Group is 2.05 times more volatile than Beijer Alma AB. It trades about 0.0 of its potential returns per unit of risk. Beijer Alma AB is currently generating about -0.02 per unit of risk. If you would invest  515.00  in GomSpace Group AB on September 12, 2024 and sell it today you would lose (20.00) from holding GomSpace Group AB or give up 3.88% of portfolio value over 90 days.

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

GomSpace Group AB  vs.  Beijer Alma AB

GomSpace Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Beijer Alma AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GomSpace Group and Beijer Alma

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

The idea behind GomSpace Group AB and Beijer Alma 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.