Correlation Between Avanza Bank and Vicore Pharma

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

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

Diversification Opportunities for Avanza Bank and Vicore Pharma

0.05

Correlation Coefficient

Avanza Bank  Vicore Pharma

Significant diversification

The 3 months correlation between Avanza and Vicore is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Avanza Bank Holding and Vicore Pharma Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicore Pharma Holding and Avanza Bank 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 Avanza Bank Holding are associated (or correlated) with Vicore Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicore Pharma Holding has no effect on the direction of Avanza Bank i.e., Avanza Bank and Vicore Pharma go up and down completely randomly.

Pair Corralation between Avanza Bank and Vicore Pharma

Assuming the 90 days trading horizon Avanza Bank is expected to generate 5.91 times less return on investment than Vicore Pharma. But when comparing it to its historical volatility, Avanza Bank Holding is 6.23 times less risky than Vicore Pharma. It trades about 0.53 of its potential returns per unit of risk. Vicore Pharma Holding is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Vicore Pharma Holding on October 10, 2024 and sell it today you would earn a total of  279.00  from holding Vicore Pharma Holding or generate 36.47% return on investment over 90 days.

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

Avanza Bank Holding  vs.  Vicore Pharma Holding

Avanza Bank Holding

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avanza Bank Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avanza Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vicore Pharma Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vicore Pharma Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vicore Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avanza Bank and Vicore Pharma

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

The idea behind Avanza Bank Holding and Vicore Pharma Holding 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.