Correlation Between Acarix AS and Xbrane Biopharma

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

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

Diversification Opportunities for Acarix AS and Xbrane Biopharma

0.67

Correlation Coefficient

Acarix AS  Xbrane Biopharma

Poor diversification

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

Pair Corralation between Acarix AS and Xbrane Biopharma

Assuming the 90 days trading horizon Acarix AS is expected to generate 0.43 times more return on investment than Xbrane Biopharma. However, Acarix AS is 2.33 times less risky than Xbrane Biopharma. It trades about 0.02 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about -0.02 per unit of risk. If you would invest  28.00  in Acarix AS on October 5, 2024 and sell it today you would lose (3.00) from holding Acarix AS or give up 10.71% of portfolio value over 90 days.

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

Acarix AS  vs.  Xbrane Biopharma AB

Acarix AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acarix AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Xbrane Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xbrane Biopharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xbrane Biopharma is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acarix AS and Xbrane Biopharma

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

The idea behind Acarix AS and Xbrane Biopharma 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.