Correlation Between BioGaia AB and Klaria Pharma

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

By analyzing existing cross correlation between BioGaia AB and Klaria Pharma Holding, you can compare the effects of market volatilities on BioGaia AB and Klaria Pharma 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 BioGaia AB with a short position of Klaria Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioGaia AB and Klaria Pharma.

Diversification Opportunities for BioGaia AB and Klaria Pharma

0.12

Correlation Coefficient

BioGaia AB  Klaria Pharma

Average diversification

The 3 months correlation between BioGaia and Klaria is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BioGaia AB and Klaria Pharma Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klaria Pharma Holding and BioGaia AB 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 BioGaia AB are associated (or correlated) with Klaria Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klaria Pharma Holding has no effect on the direction of BioGaia AB i.e., BioGaia AB and Klaria Pharma go up and down completely randomly.

Pair Corralation between BioGaia AB and Klaria Pharma

Assuming the 90 days trading horizon BioGaia AB is expected to generate 9.33 times less return on investment than Klaria Pharma. But when comparing it to its historical volatility, BioGaia AB is 5.42 times less risky than Klaria Pharma. It trades about 0.03 of its potential returns per unit of risk. Klaria Pharma Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Klaria Pharma Holding on October 26, 2024 and sell it today you would earn a total of  12.00  from holding Klaria Pharma Holding or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BioGaia AB  vs.  Klaria Pharma Holding

BioGaia AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioGaia AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, BioGaia AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Klaria Pharma Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Klaria Pharma Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Klaria Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioGaia AB and Klaria Pharma

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

The idea behind BioGaia AB and Klaria Pharma Holding 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.