Correlation Between Alligator Bioscience and Acarix AS

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

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

Diversification Opportunities for Alligator Bioscience and Acarix AS

0.03

Correlation Coefficient

Alligator Bioscience  Acarix AS

Significant diversification

The 3 months correlation between Alligator and Acarix is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Bioscience AB and Acarix AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acarix AS and Alligator 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 Alligator Bioscience AB are associated (or correlated) with Acarix AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acarix AS has no effect on the direction of Alligator Bioscience i.e., Alligator Bioscience and Acarix AS go up and down completely randomly.

Pair Corralation between Alligator Bioscience and Acarix AS

Assuming the 90 days trading horizon Alligator Bioscience AB is expected to generate 33.0 times more return on investment than Acarix AS. However, Alligator Bioscience is 33.0 times more volatile than Acarix AS. It trades about 0.14 of its potential returns per unit of risk. Acarix AS is currently generating about 0.02 per unit of risk. If you would invest  2.11  in Alligator Bioscience AB on December 30, 2024 and sell it today you would lose (1.40) from holding Alligator Bioscience AB or give up 66.35% of portfolio value over 90 days.

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

Alligator Bioscience AB  vs.  Acarix AS

Alligator Bioscience

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alligator Bioscience AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alligator Bioscience unveiled solid returns over the last few months and may actually be approaching a breakup point.

Acarix AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acarix AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Acarix AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alligator Bioscience and Acarix AS

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

The idea behind Alligator Bioscience AB and Acarix AS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.