Correlation Between Bavarian Nordic and Othania Invest

Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and Othania Invest 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 Bavarian Nordic and Othania Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bavarian Nordic and Othania Invest, you can compare the effects of market volatilities on Bavarian Nordic and Othania Invest 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 Bavarian Nordic with a short position of Othania Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Othania Invest.

Diversification Opportunities for Bavarian Nordic and Othania Invest

-0.82

Correlation Coefficient

Bavarian Nordic  Othania Invest

Pay attention - limited upside

The 3 months correlation between Bavarian and Othania is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Othania Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Othania Invest and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Othania Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Othania Invest has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Othania Invest go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Othania Invest

Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Othania Invest. In addition to that, Bavarian Nordic is 4.6 times more volatile than Othania Invest. It trades about -0.09 of its total potential returns per unit of risk. Othania Invest is currently generating about 0.13 per unit of volatility. If you would invest  522,352  in Othania Invest on September 13, 2024 and sell it today you would earn a total of  29,101  from holding Othania Invest or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bavarian Nordic  vs.  Othania Invest

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Othania Invest

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Othania Invest are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Othania Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bavarian Nordic and Othania Invest

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

The idea behind Bavarian Nordic and Othania Invest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.