Correlation Between Alligator Bioscience and Bio Works

Can any of the company-specific risk be diversified away by investing in both Alligator Bioscience and Bio Works 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 Bio Works 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 Bio Works Technologies AB, you can compare the effects of market volatilities on Alligator Bioscience and Bio Works 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 Bio Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alligator Bioscience and Bio Works.

Diversification Opportunities for Alligator Bioscience and Bio Works

0.58

Correlation Coefficient

Alligator Bioscience  Bio Works

Very weak diversification

The 3 months correlation between Alligator and Bio is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Bioscience AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies 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 Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of Alligator Bioscience i.e., Alligator Bioscience and Bio Works go up and down completely randomly.

Pair Corralation between Alligator Bioscience and Bio Works

Assuming the 90 days trading horizon Alligator Bioscience AB is expected to generate 1.0 times more return on investment than Bio Works. However, Alligator Bioscience is 1.0 times more volatile than Bio Works Technologies AB. It trades about -0.02 of its potential returns per unit of risk. Bio Works Technologies AB is currently generating about -0.08 per unit of risk. If you would invest  65.00  in Alligator Bioscience AB on October 5, 2024 and sell it today you would lose (40.00) from holding Alligator Bioscience AB or give up 61.54% of portfolio value over 90 days.

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

Alligator Bioscience AB  vs.  Bio Works Technologies AB

Alligator Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bio Works Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alligator Bioscience and Bio Works

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

The idea behind Alligator Bioscience AB and Bio Works Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.