Correlation Between AlzeCure Pharma and Swedish Orphan

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

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

Diversification Opportunities for AlzeCure Pharma and Swedish Orphan

0.33

Correlation Coefficient

AlzeCure Pharma  Swedish Orphan

Weak diversification

The 3 months correlation between AlzeCure and Swedish is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AlzeCure Pharma and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and AlzeCure Pharma 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 AlzeCure Pharma are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of AlzeCure Pharma i.e., AlzeCure Pharma and Swedish Orphan go up and down completely randomly.

Pair Corralation between AlzeCure Pharma and Swedish Orphan

Assuming the 90 days trading horizon AlzeCure Pharma is expected to generate 4.6 times more return on investment than Swedish Orphan. However, AlzeCure Pharma is 4.6 times more volatile than Swedish Orphan Biovitrum. It trades about 0.25 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about 0.06 per unit of risk. If you would invest  120.00  in AlzeCure Pharma on October 9, 2024 and sell it today you would earn a total of  25.00  from holding AlzeCure Pharma or generate 20.83% return on investment over 90 days.

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

AlzeCure Pharma  vs.  Swedish Orphan Biovitrum

AlzeCure Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlzeCure Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Swedish Orphan Biovitrum

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swedish Orphan Biovitrum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Swedish Orphan may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AlzeCure Pharma and Swedish Orphan

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

The idea behind AlzeCure Pharma and Swedish Orphan Biovitrum 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.