Correlation Between New Wave and Bjorn Borg

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Can any of the company-specific risk be diversified away by investing in both New Wave and Bjorn Borg 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 New Wave and Bjorn Borg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Group and Bjorn Borg AB, you can compare the effects of market volatilities on New Wave and Bjorn Borg 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 New Wave with a short position of Bjorn Borg. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Bjorn Borg.

Diversification Opportunities for New Wave and Bjorn Borg

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between New and Bjorn is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Bjorn Borg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bjorn Borg AB and New Wave 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 New Wave Group are associated (or correlated) with Bjorn Borg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bjorn Borg AB has no effect on the direction of New Wave i.e., New Wave and Bjorn Borg go up and down completely randomly.

Pair Corralation between New Wave and Bjorn Borg

Assuming the 90 days trading horizon New Wave Group is expected to generate 1.05 times more return on investment than Bjorn Borg. However, New Wave is 1.05 times more volatile than Bjorn Borg AB. It trades about 0.12 of its potential returns per unit of risk. Bjorn Borg AB is currently generating about 0.05 per unit of risk. If you would invest  10,903  in New Wave Group on April 25, 2025 and sell it today you would earn a total of  1,277  from holding New Wave Group or generate 11.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

New Wave Group  vs.  Bjorn Borg AB

 Performance 
       Timeline  
New Wave Group 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Wave Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, New Wave may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Bjorn Borg AB 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bjorn Borg AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bjorn Borg is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

New Wave and Bjorn Borg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with New Wave and Bjorn Borg

The main advantage of trading using opposite New Wave and Bjorn Borg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Bjorn Borg 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 Bjorn Borg will offset losses from the drop in Bjorn Borg's long position.
The idea behind New Wave Group and Bjorn Borg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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