Correlation Between Alligator Bioscience and Spago Nanomedical

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

Diversification Opportunities for Alligator Bioscience and Spago Nanomedical

0.84

Correlation Coefficient

Alligator Bioscience  Spago Nanomedical

Very poor diversification

The 3 months correlation between Alligator and Spago is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Bioscience AB and Spago Nanomedical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spago Nanomedical 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 Spago Nanomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spago Nanomedical has no effect on the direction of Alligator Bioscience i.e., Alligator Bioscience and Spago Nanomedical go up and down completely randomly.

Pair Corralation between Alligator Bioscience and Spago Nanomedical

Assuming the 90 days trading horizon Alligator Bioscience is expected to generate 4.49 times less return on investment than Spago Nanomedical. In addition to that, Alligator Bioscience is 2.02 times more volatile than Spago Nanomedical AB. It trades about 0.04 of its total potential returns per unit of risk. Spago Nanomedical AB is currently generating about 0.32 per unit of volatility. If you would invest  18.00  in Spago Nanomedical AB on October 10, 2024 and sell it today you would earn a total of  4.00  from holding Spago Nanomedical AB or generate 22.22% return on investment over 90 days.

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

Alligator Bioscience AB  vs.  Spago Nanomedical 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.

Spago Nanomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spago Nanomedical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Spago Nanomedical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alligator Bioscience and Spago Nanomedical

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

The idea behind Alligator Bioscience AB and Spago Nanomedical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.