Correlation Between BICO Group and Divio Technologies

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

Diversification Opportunities for BICO Group and Divio Technologies

0.76

Correlation Coefficient

BICO Group  Divio Technologies

Poor diversification

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

Pair Corralation between BICO Group and Divio Technologies

Assuming the 90 days trading horizon BICO Group is expected to generate 3.49 times less return on investment than Divio Technologies. But when comparing it to its historical volatility, BICO Group AB is 2.31 times less risky than Divio Technologies. It trades about 0.18 of its potential returns per unit of risk. Divio Technologies AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Divio Technologies AB on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Divio Technologies AB or generate 28.57% return on investment over 90 days.

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

BICO Group AB  vs.  Divio Technologies AB

BICO Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BICO Group 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.

Divio Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Divio Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BICO Group and Divio Technologies

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

The idea behind BICO Group AB and Divio Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.