Correlation Between BioArctic and Alligator Bioscience

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

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

Diversification Opportunities for BioArctic and Alligator Bioscience

-0.19

Correlation Coefficient

BioArctic  Alligator Bioscience

Good diversification

The 3 months correlation between BioArctic and Alligator is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Alligator Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Bioscience 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 Alligator Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Bioscience has no effect on the direction of BioArctic i.e., BioArctic and Alligator Bioscience go up and down completely randomly.

Pair Corralation between BioArctic and Alligator Bioscience

Assuming the 90 days trading horizon BioArctic AB is expected to generate 0.85 times more return on investment than Alligator Bioscience. However, BioArctic AB is 1.17 times less risky than Alligator Bioscience. It trades about 0.07 of its potential returns per unit of risk. Alligator Bioscience AB is currently generating about -0.19 per unit of risk. If you would invest  16,410  in BioArctic AB on September 2, 2024 and sell it today you would earn a total of  2,900  from holding BioArctic AB or generate 17.67% return on investment over 90 days.

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

BioArctic AB  vs.  Alligator Bioscience AB

BioArctic AB

Risk-Adjusted Performance

5 of 100

Modest

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

Alligator Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alligator Bioscience AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BioArctic and Alligator Bioscience

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

The idea behind BioArctic AB and Alligator Bioscience 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.