Correlation Between BioPorto and BioArctic

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

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

Diversification Opportunities for BioPorto and BioArctic

-0.59

Correlation Coefficient

BioPorto  BioArctic

Excellent diversification

The 3 months correlation between BioPorto and BioArctic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and BioPorto 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 BioPorto are associated (or correlated) with BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of BioPorto i.e., BioPorto and BioArctic go up and down completely randomly.

Pair Corralation between BioPorto and BioArctic

Assuming the 90 days trading horizon BioPorto is expected to under-perform the BioArctic. But the stock apears to be less risky and, when comparing its historical volatility, BioPorto is 1.76 times less risky than BioArctic. The stock trades about -0.07 of its potential returns per unit of risk. The BioArctic AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,280  in BioArctic AB on December 4, 2024 and sell it today you would earn a total of  4,020  from holding BioArctic AB or generate 21.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

BioPorto  vs.  BioArctic AB

BioPorto

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioPorto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BioArctic AB

Risk-Adjusted Performance

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.

Pair Trading with BioPorto and BioArctic

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

The idea behind BioPorto and BioArctic 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.