Correlation Between Industrivarden and Bure Equity

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

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

Diversification Opportunities for Industrivarden and Bure Equity

0.32

Correlation Coefficient

Industrivarden  Bure Equity

Weak diversification

The 3 months correlation between Industrivarden and Bure is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Bure Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bure Equity AB and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Bure Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bure Equity AB has no effect on the direction of Industrivarden i.e., Industrivarden and Bure Equity go up and down completely randomly.

Pair Corralation between Industrivarden and Bure Equity

Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.63 times more return on investment than Bure Equity. However, Industrivarden AB ser is 1.6 times less risky than Bure Equity. It trades about -0.11 of its potential returns per unit of risk. Bure Equity AB is currently generating about -0.1 per unit of risk. If you would invest  36,740  in Industrivarden AB ser on August 31, 2024 and sell it today you would lose (970.00) from holding Industrivarden AB ser or give up 2.64% of portfolio value over 90 days.

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

Industrivarden AB ser  vs.  Bure Equity AB

Industrivarden AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Industrivarden and Bure Equity

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

The idea behind Industrivarden AB ser and Bure Equity 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.