Correlation Between BioInvent International and Lipum AB

Can any of the company-specific risk be diversified away by investing in both BioInvent International and Lipum 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 BioInvent International and Lipum AB 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 Lipum AB, you can compare the effects of market volatilities on BioInvent International and Lipum 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 BioInvent International with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioInvent International and Lipum AB.

Diversification Opportunities for BioInvent International and Lipum AB

0.21

Correlation Coefficient

BioInvent International  Lipum AB

Modest diversification

The 3 months correlation between BioInvent and Lipum is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BioInvent International AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of BioInvent International i.e., BioInvent International and Lipum AB go up and down completely randomly.

Pair Corralation between BioInvent International and Lipum AB

Assuming the 90 days trading horizon BioInvent International AB is expected to under-perform the Lipum AB. But the stock apears to be less risky and, when comparing its historical volatility, BioInvent International AB is 1.37 times less risky than Lipum AB. The stock trades about -0.08 of its potential returns per unit of risk. The Lipum AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,410  in Lipum AB on September 23, 2024 and sell it today you would lose (120.00) from holding Lipum AB or give up 8.51% of portfolio value over 90 days.

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

BioInvent International AB  vs.  Lipum AB

BioInvent International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioInvent International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lipum AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lipum AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BioInvent International and Lipum AB

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

The idea behind BioInvent International AB and Lipum 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.