Correlation Between Bavarian Nordic and ExpreS2ion Biotech

Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and ExpreS2ion Biotech 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 ExpreS2ion Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bavarian Nordic and ExpreS2ion Biotech Holding, you can compare the effects of market volatilities on Bavarian Nordic and ExpreS2ion Biotech 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 ExpreS2ion Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and ExpreS2ion Biotech.

Diversification Opportunities for Bavarian Nordic and ExpreS2ion Biotech

0.76

Correlation Coefficient

Bavarian Nordic  ExpreS2ion Biotech

Poor diversification

The 3 months correlation between Bavarian and ExpreS2ion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and ExpreS2ion Biotech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExpreS2ion Biotech 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 ExpreS2ion Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExpreS2ion Biotech has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and ExpreS2ion Biotech go up and down completely randomly.

Pair Corralation between Bavarian Nordic and ExpreS2ion Biotech

Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 0.46 times more return on investment than ExpreS2ion Biotech. However, Bavarian Nordic is 2.18 times less risky than ExpreS2ion Biotech. It trades about -0.13 of its potential returns per unit of risk. ExpreS2ion Biotech Holding is currently generating about -0.11 per unit of risk. If you would invest  26,700  in Bavarian Nordic on August 31, 2024 and sell it today you would lose (7,350) from holding Bavarian Nordic or give up 27.53% of portfolio value over 90 days.

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

Bavarian Nordic  vs.  ExpreS2ion Biotech Holding

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

ExpreS2ion Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExpreS2ion Biotech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bavarian Nordic and ExpreS2ion Biotech

The main advantage of trading using opposite Bavarian Nordic and ExpreS2ion Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, ExpreS2ion Biotech 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 ExpreS2ion Biotech will offset losses from the drop in ExpreS2ion Biotech's long position.

The idea behind Bavarian Nordic and ExpreS2ion Biotech 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 Global Correlations module to find global opportunities by holding instruments from different markets.