Correlation Between Idex ASA and Bonheur

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

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

Diversification Opportunities for Idex ASA and Bonheur

-0.14

Correlation Coefficient

Idex ASA  Bonheur

Good diversification

The 3 months correlation between Idex and Bonheur is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Idex ASA and Bonheur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonheur and Idex ASA 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 Idex ASA are associated (or correlated) with Bonheur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonheur has no effect on the direction of Idex ASA i.e., Idex ASA and Bonheur go up and down completely randomly.

Pair Corralation between Idex ASA and Bonheur

Assuming the 90 days trading horizon Idex ASA is expected to under-perform the Bonheur. In addition to that, Idex ASA is 5.51 times more volatile than Bonheur. It trades about -0.2 of its total potential returns per unit of risk. Bonheur is currently generating about 0.07 per unit of volatility. If you would invest  26,050  in Bonheur on September 3, 2024 and sell it today you would earn a total of  1,500  from holding Bonheur or generate 5.76% return on investment over 90 days.

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

Idex ASA  vs.  Bonheur

Idex ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idex ASA 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 essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bonheur

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bonheur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bonheur is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Idex ASA and Bonheur

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

The idea behind Idex ASA and Bonheur 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.