Correlation Between BioArctic and Freemelt Holding

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

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

Diversification Opportunities for BioArctic and Freemelt Holding

-0.32

Correlation Coefficient

BioArctic  Freemelt Holding

Very good diversification

The 3 months correlation between BioArctic and Freemelt is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Freemelt Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freemelt Holding 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 Freemelt Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freemelt Holding has no effect on the direction of BioArctic i.e., BioArctic and Freemelt Holding go up and down completely randomly.

Pair Corralation between BioArctic and Freemelt Holding

Assuming the 90 days trading horizon BioArctic AB is expected to generate 0.63 times more return on investment than Freemelt Holding. However, BioArctic AB is 1.58 times less risky than Freemelt Holding. It trades about 0.0 of its potential returns per unit of risk. Freemelt Holding AB is currently generating about -0.04 per unit of risk. If you would invest  27,140  in BioArctic AB on September 26, 2024 and sell it today you would lose (6,940) from holding BioArctic AB or give up 25.57% of portfolio value over 90 days.

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

BioArctic AB  vs.  Freemelt Holding AB

BioArctic AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 6 (%) 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.

Freemelt Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freemelt Holding 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 Freemelt Holding

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

The idea behind BioArctic AB and Freemelt Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.