Correlation Between Active Biotech and Eniro AB

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

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

Diversification Opportunities for Active Biotech and Eniro AB

-0.75

Correlation Coefficient

Active Biotech  Eniro AB

Pay attention - limited upside

The 3 months correlation between Active and Eniro is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Active Biotech AB and Eniro AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eniro AB and Active Biotech 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 Active Biotech AB are associated (or correlated) with Eniro AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eniro AB has no effect on the direction of Active Biotech i.e., Active Biotech and Eniro AB go up and down completely randomly.

Pair Corralation between Active Biotech and Eniro AB

Assuming the 90 days trading horizon Active Biotech AB is expected to under-perform the Eniro AB. In addition to that, Active Biotech is 1.49 times more volatile than Eniro AB. It trades about -0.04 of its total potential returns per unit of risk. Eniro AB is currently generating about 0.09 per unit of volatility. If you would invest  45.00  in Eniro AB on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Eniro AB or generate 15.56% return on investment over 90 days.

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

Active Biotech AB  vs.  Eniro AB

Active Biotech AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Active Biotech AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Eniro AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eniro AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eniro AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Active Biotech and Eniro AB

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

The idea behind Active Biotech AB and Eniro 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.