Correlation Between BioArctic and Spago Nanomedical

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

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

Diversification Opportunities for BioArctic and Spago Nanomedical

-0.47

Correlation Coefficient

BioArctic  Spago Nanomedical

Very good diversification

The 3 months correlation between BioArctic and Spago is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Spago Nanomedical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spago Nanomedical 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 Spago Nanomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spago Nanomedical has no effect on the direction of BioArctic i.e., BioArctic and Spago Nanomedical go up and down completely randomly.

Pair Corralation between BioArctic and Spago Nanomedical

Assuming the 90 days trading horizon BioArctic AB is expected to generate 0.66 times more return on investment than Spago Nanomedical. However, BioArctic AB is 1.52 times less risky than Spago Nanomedical. It trades about -0.01 of its potential returns per unit of risk. Spago Nanomedical AB is currently generating about -0.02 per unit of risk. If you would invest  33,360  in BioArctic AB on October 11, 2024 and sell it today you would lose (12,760) from holding BioArctic AB or give up 38.25% of portfolio value over 90 days.

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

BioArctic AB  vs.  Spago Nanomedical AB

BioArctic AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 7 (%) 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.

Spago Nanomedical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BioArctic and Spago Nanomedical

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

The idea behind BioArctic AB and Spago Nanomedical 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.