Correlation Between BioArctic and Ascelia Pharma

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

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

Diversification Opportunities for BioArctic and Ascelia Pharma

0.52

Correlation Coefficient

BioArctic  Ascelia Pharma

Very weak diversification

The 3 months correlation between BioArctic and Ascelia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Ascelia Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascelia Pharma AB and BioArctic 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 BioArctic AB are associated (or correlated) with Ascelia Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascelia Pharma AB has no effect on the direction of BioArctic i.e., BioArctic and Ascelia Pharma go up and down completely randomly.

Pair Corralation between BioArctic and Ascelia Pharma

Assuming the 90 days trading horizon BioArctic AB is expected to under-perform the Ascelia Pharma. In addition to that, BioArctic is 1.04 times more volatile than Ascelia Pharma AB. It trades about -0.04 of its total potential returns per unit of risk. Ascelia Pharma AB is currently generating about 0.0 per unit of volatility. If you would invest  303.00  in Ascelia Pharma AB on December 27, 2024 and sell it today you would lose (13.00) from holding Ascelia Pharma AB or give up 4.29% of portfolio value over 90 days.

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

BioArctic AB  vs.  Ascelia Pharma AB

BioArctic AB

Risk-Adjusted Performance

Very Weak

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

Ascelia Pharma AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BioArctic and Ascelia Pharma

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

The idea behind BioArctic AB and Ascelia Pharma 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.