Correlation Between Arctic Bioscience and Envipco Holding

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

By analyzing existing cross correlation between Arctic Bioscience AS and Envipco Holding NV, you can compare the effects of market volatilities on Arctic Bioscience and Envipco Holding 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 Arctic Bioscience with a short position of Envipco Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Bioscience and Envipco Holding.

Diversification Opportunities for Arctic Bioscience and Envipco Holding

-0.24

Correlation Coefficient

Arctic Bioscience  Envipco Holding

Very good diversification

The 3 months correlation between Arctic and Envipco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Bioscience AS and Envipco Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envipco Holding NV and Arctic Bioscience 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 Arctic Bioscience AS are associated (or correlated) with Envipco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envipco Holding NV has no effect on the direction of Arctic Bioscience i.e., Arctic Bioscience and Envipco Holding go up and down completely randomly.

Pair Corralation between Arctic Bioscience and Envipco Holding

Assuming the 90 days trading horizon Arctic Bioscience AS is expected to generate 2.95 times more return on investment than Envipco Holding. However, Arctic Bioscience is 2.95 times more volatile than Envipco Holding NV. It trades about 0.2 of its potential returns per unit of risk. Envipco Holding NV is currently generating about 0.04 per unit of risk. If you would invest  191.00  in Arctic Bioscience AS on December 22, 2024 and sell it today you would earn a total of  239.00  from holding Arctic Bioscience AS or generate 125.13% return on investment over 90 days.

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

Arctic Bioscience AS  vs.  Envipco Holding NV

Arctic Bioscience

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Bioscience AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Arctic Bioscience disclosed solid returns over the last few months and may actually be approaching a breakup point.

Envipco Holding NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envipco Holding NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Envipco Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Arctic Bioscience and Envipco Holding

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

The idea behind Arctic Bioscience AS and Envipco Holding NV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.