Correlation Between BICO Group and Genovis AB

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

Diversification Opportunities for BICO Group and Genovis AB

0.73

Correlation Coefficient

BICO Group  Genovis AB

Poor diversification

The 3 months correlation between BICO and Genovis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Genovis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovis AB 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 Genovis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovis AB has no effect on the direction of BICO Group i.e., BICO Group and Genovis AB go up and down completely randomly.

Pair Corralation between BICO Group and Genovis AB

Assuming the 90 days trading horizon BICO Group AB is expected to generate 0.93 times more return on investment than Genovis AB. However, BICO Group AB is 1.08 times less risky than Genovis AB. It trades about 0.07 of its potential returns per unit of risk. Genovis AB is currently generating about 0.05 per unit of risk. If you would invest  3,214  in BICO Group AB on November 30, 2024 and sell it today you would earn a total of  450.00  from holding BICO Group AB or generate 14.0% 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.  Genovis AB

BICO Group AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BICO Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BICO Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genovis AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genovis AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Genovis AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BICO Group and Genovis AB

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

The idea behind BICO Group AB and Genovis 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.