Correlation Between BioInvent International and Bactiguard Holding

Can any of the company-specific risk be diversified away by investing in both BioInvent International and Bactiguard Holding 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 BioInvent International and Bactiguard Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioInvent International AB and Bactiguard Holding AB, you can compare the effects of market volatilities on BioInvent International and Bactiguard Holding 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 BioInvent International with a short position of Bactiguard Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioInvent International and Bactiguard Holding.

Diversification Opportunities for BioInvent International and Bactiguard Holding

-0.5

Correlation Coefficient

BioInvent International  Bactiguard Holding

Very good diversification

The 3 months correlation between BioInvent and Bactiguard is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BioInvent International AB and Bactiguard Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiguard Holding and BioInvent International 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 BioInvent International AB are associated (or correlated) with Bactiguard Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiguard Holding has no effect on the direction of BioInvent International i.e., BioInvent International and Bactiguard Holding go up and down completely randomly.

Pair Corralation between BioInvent International and Bactiguard Holding

Assuming the 90 days trading horizon BioInvent International AB is expected to generate 1.19 times more return on investment than Bactiguard Holding. However, BioInvent International is 1.19 times more volatile than Bactiguard Holding AB. It trades about 0.04 of its potential returns per unit of risk. Bactiguard Holding AB is currently generating about -0.32 per unit of risk. If you would invest  4,065  in BioInvent International AB on September 2, 2024 and sell it today you would earn a total of  235.00  from holding BioInvent International AB or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BioInvent International AB  vs.  Bactiguard Holding AB

BioInvent International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioInvent International AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BioInvent International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bactiguard Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bactiguard Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BioInvent International and Bactiguard Holding

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

The idea behind BioInvent International AB and Bactiguard Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.