Correlation Between Bure Equity and Generic Sweden

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

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

Diversification Opportunities for Bure Equity and Generic Sweden

0.13

Correlation Coefficient

Bure Equity  Generic Sweden

Average diversification

The 3 months correlation between Bure and Generic is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bure Equity AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Bure Equity 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 Bure Equity AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Bure Equity i.e., Bure Equity and Generic Sweden go up and down completely randomly.

Pair Corralation between Bure Equity and Generic Sweden

Assuming the 90 days trading horizon Bure Equity AB is expected to under-perform the Generic Sweden. But the stock apears to be less risky and, when comparing its historical volatility, Bure Equity AB is 1.23 times less risky than Generic Sweden. The stock trades about -0.04 of its potential returns per unit of risk. The Generic Sweden publ is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,600  in Generic Sweden publ on April 23, 2025 and sell it today you would lose (20.00) from holding Generic Sweden publ or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bure Equity AB  vs.  Generic Sweden publ

Bure Equity AB

Risk-Adjusted Performance

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 comparatively stable basic indicators, Bure Equity is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Generic Sweden publ

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bure Equity and Generic Sweden

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

The idea behind Bure Equity AB and Generic Sweden publ 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.