Correlation Between Peab AB and Boozt AB

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

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

Diversification Opportunities for Peab AB and Boozt AB

-0.27

Correlation Coefficient

Peab AB  Boozt AB

Very good diversification

The 3 months correlation between Peab and Boozt is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Peab AB and Boozt AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boozt AB and Peab AB 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 Peab AB are associated (or correlated) with Boozt AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boozt AB has no effect on the direction of Peab AB i.e., Peab AB and Boozt AB go up and down completely randomly.

Pair Corralation between Peab AB and Boozt AB

Assuming the 90 days trading horizon Peab AB is expected to generate 3.8 times less return on investment than Boozt AB. But when comparing it to its historical volatility, Peab AB is 1.64 times less risky than Boozt AB. It trades about 0.05 of its potential returns per unit of risk. Boozt AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,280  in Boozt AB on September 16, 2024 and sell it today you would earn a total of  2,200  from holding Boozt AB or generate 21.4% return on investment over 90 days.

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

Peab AB  vs.  Boozt AB

Peab AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Peab AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Peab AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Boozt AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boozt AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Boozt AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peab AB and Boozt AB

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

The idea behind Peab AB and Boozt 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.