Correlation Between BioArctic and Litium AB
Can any of the company-specific risk be diversified away by investing in both BioArctic and Litium AB 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 Litium AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioArctic AB and Litium AB, you can compare the effects of market volatilities on BioArctic and Litium AB 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 Litium AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioArctic and Litium AB.
Diversification Opportunities for BioArctic and Litium AB
Very good diversification
The 3 months correlation between BioArctic and Litium is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Litium AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litium 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 Litium AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litium AB has no effect on the direction of BioArctic i.e., BioArctic and Litium AB go up and down completely randomly.
Pair Corralation between BioArctic and Litium AB
Assuming the 90 days trading horizon BioArctic AB is expected to generate 2.91 times more return on investment than Litium AB. However, BioArctic is 2.91 times more volatile than Litium AB. It trades about 0.02 of its potential returns per unit of risk. Litium AB is currently generating about -0.13 per unit of risk. If you would invest 22,300 in BioArctic AB on September 24, 2024 and sell it today you would lose (1,020) from holding BioArctic AB or give up 4.57% 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. Litium AB
Performance |
Timeline |
BioArctic AB |
Litium AB |
BioArctic and Litium AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BioArctic and Litium AB
The main advantage of trading using opposite BioArctic and Litium AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioArctic position performs unexpectedly, Litium AB 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 Litium AB will offset losses from the drop in Litium AB's long position.BioArctic vs. BioInvent International AB | BioArctic vs. Alligator Bioscience AB | BioArctic vs. Moberg Pharma AB | BioArctic vs. Oncopeptides AB |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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