Correlation Between BioInvent International and Xbrane Biopharma

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

Diversification Opportunities for BioInvent International and Xbrane Biopharma

0.41

Correlation Coefficient

BioInvent International  Xbrane Biopharma

Very weak diversification

The 3 months correlation between BioInvent and Xbrane is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BioInvent International AB and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma 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 Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of BioInvent International i.e., BioInvent International and Xbrane Biopharma go up and down completely randomly.

Pair Corralation between BioInvent International and Xbrane Biopharma

Assuming the 90 days trading horizon BioInvent International is expected to generate 3.05 times less return on investment than Xbrane Biopharma. But when comparing it to its historical volatility, BioInvent International AB is 1.81 times less risky than Xbrane Biopharma. It trades about 0.05 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Xbrane Biopharma AB on August 31, 2024 and sell it today you would earn a total of  4.00  from holding Xbrane Biopharma AB or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

BioInvent International AB  vs.  Xbrane Biopharma AB

BioInvent International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioInvent International AB are ranked lower than 4 (%) 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 December 2024.

Xbrane Biopharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xbrane Biopharma AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Xbrane Biopharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioInvent International and Xbrane Biopharma

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

The idea behind BioInvent International AB and Xbrane Biopharma 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.