Correlation Between BICO Group and Chordate Medical
Can any of the company-specific risk be diversified away by investing in both BICO Group and Chordate Medical 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 BICO Group and Chordate Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BICO Group AB and Chordate Medical Holding, you can compare the effects of market volatilities on BICO Group and Chordate Medical 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 BICO Group with a short position of Chordate Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BICO Group and Chordate Medical.
Diversification Opportunities for BICO Group and Chordate Medical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BICO and Chordate is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Chordate Medical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chordate Medical Holding and BICO Group 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 BICO Group AB are associated (or correlated) with Chordate Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chordate Medical Holding has no effect on the direction of BICO Group i.e., BICO Group and Chordate Medical go up and down completely randomly.
Pair Corralation between BICO Group and Chordate Medical
Assuming the 90 days trading horizon BICO Group AB is expected to generate 1.18 times more return on investment than Chordate Medical. However, BICO Group is 1.18 times more volatile than Chordate Medical Holding. It trades about -0.07 of its potential returns per unit of risk. Chordate Medical Holding is currently generating about -0.58 per unit of risk. If you would invest 3,950 in BICO Group AB on September 23, 2024 and sell it today you would lose (716.00) from holding BICO Group AB or give up 18.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BICO Group AB vs. Chordate Medical Holding
Performance |
Timeline |
BICO Group AB |
Chordate Medical Holding |
BICO Group and Chordate Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BICO Group and Chordate Medical
The main advantage of trading using opposite BICO Group and Chordate Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICO Group position performs unexpectedly, Chordate Medical 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 Chordate Medical will offset losses from the drop in Chordate Medical's long position.BICO Group vs. Sinch AB | BICO Group vs. Hexatronic Group AB | BICO Group vs. Surgical Science Sweden | BICO Group vs. Embracer Group AB |
Chordate Medical vs. Sinch AB | Chordate Medical vs. Hexatronic Group AB | Chordate Medical vs. Surgical Science Sweden | Chordate Medical vs. Embracer Group AB |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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