Correlation Between Schibsted ASA and Byggma

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

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

Diversification Opportunities for Schibsted ASA and Byggma

-0.67

Correlation Coefficient

Schibsted ASA  Byggma

Excellent diversification

The 3 months correlation between Schibsted and Byggma is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Schibsted ASA B and Byggma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggma and Schibsted 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 Schibsted ASA B are associated (or correlated) with Byggma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggma has no effect on the direction of Schibsted ASA i.e., Schibsted ASA and Byggma go up and down completely randomly.

Pair Corralation between Schibsted ASA and Byggma

Assuming the 90 days trading horizon Schibsted ASA B is expected to under-perform the Byggma. But the stock apears to be less risky and, when comparing its historical volatility, Schibsted ASA B is 1.95 times less risky than Byggma. The stock trades about -0.03 of its potential returns per unit of risk. The Byggma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,505  in Byggma on September 24, 2024 and sell it today you would earn a total of  15.00  from holding Byggma or generate 1.0% return on investment over 90 days.

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

Schibsted ASA B  vs.  Byggma

Schibsted ASA B

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Schibsted ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Byggma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Byggma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic 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.

Pair Trading with Schibsted ASA and Byggma

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

The idea behind Schibsted ASA B and Byggma 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.