Correlation Between BioArctic and Elicera Therapeutics

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

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

Diversification Opportunities for BioArctic and Elicera Therapeutics

0.42

Correlation Coefficient

BioArctic  Elicera Therapeutics

Very weak diversification

The 3 months correlation between BioArctic and Elicera is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Elicera Therapeutics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elicera Therapeutics 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 Elicera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elicera Therapeutics has no effect on the direction of BioArctic i.e., BioArctic and Elicera Therapeutics go up and down completely randomly.

Pair Corralation between BioArctic and Elicera Therapeutics

Assuming the 90 days trading horizon BioArctic is expected to generate 6.48 times less return on investment than Elicera Therapeutics. But when comparing it to its historical volatility, BioArctic AB is 1.69 times less risky than Elicera Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Elicera Therapeutics AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Elicera Therapeutics AB on December 25, 2024 and sell it today you would earn a total of  56.00  from holding Elicera Therapeutics AB or generate 32.0% return on investment over 90 days.

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

BioArctic AB  vs.  Elicera Therapeutics AB

BioArctic AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BioArctic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Elicera Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elicera Therapeutics AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Elicera Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioArctic and Elicera Therapeutics

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

The idea behind BioArctic AB and Elicera Therapeutics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.