Correlation Between Bambuser and Terranet

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

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

Diversification Opportunities for Bambuser and Terranet

0.31

Correlation Coefficient

Bambuser  Terranet

Weak diversification

The 3 months correlation between Bambuser and Terranet is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bambuser AB and Terranet AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terranet AB and Bambuser 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 Bambuser AB are associated (or correlated) with Terranet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terranet AB has no effect on the direction of Bambuser i.e., Bambuser and Terranet go up and down completely randomly.

Pair Corralation between Bambuser and Terranet

Assuming the 90 days trading horizon Bambuser AB is expected to generate 4.13 times more return on investment than Terranet. However, Bambuser is 4.13 times more volatile than Terranet AB. It trades about 0.09 of its potential returns per unit of risk. Terranet AB is currently generating about 0.02 per unit of risk. If you would invest  50.00  in Bambuser AB on April 25, 2025 and sell it today you would earn a total of  22.00  from holding Bambuser AB or generate 44.0% return on investment over 90 days.

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

Bambuser AB  vs.  Terranet AB

Bambuser AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bambuser AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bambuser unveiled solid returns over the last few months and may actually be approaching a breakup point.

Terranet AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Terranet AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Terranet may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bambuser and Terranet

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

The idea behind Bambuser AB and Terranet 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.