Correlation Between Alzinova and BioArctic

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

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

Diversification Opportunities for Alzinova and BioArctic

-0.28

Correlation Coefficient

Alzinova  BioArctic

Very good diversification

The 3 months correlation between Alzinova and BioArctic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alzinova AB and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and Alzinova 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 Alzinova AB are associated (or correlated) with BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of Alzinova i.e., Alzinova and BioArctic go up and down completely randomly.

Pair Corralation between Alzinova and BioArctic

Assuming the 90 days trading horizon Alzinova AB is expected to under-perform the BioArctic. But the stock apears to be less risky and, when comparing its historical volatility, Alzinova AB is 1.18 times less risky than BioArctic. The stock trades about -0.14 of its potential returns per unit of risk. The BioArctic AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20,360  in BioArctic AB on December 24, 2024 and sell it today you would earn a total of  640.00  from holding BioArctic AB or generate 3.14% return on investment over 90 days.

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

Alzinova AB  vs.  BioArctic AB

Alzinova AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alzinova AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BioArctic AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, BioArctic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alzinova and BioArctic

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

The idea behind Alzinova AB and BioArctic 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.