Correlation Between BioPorto and Bang Olufsen

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

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

Diversification Opportunities for BioPorto and Bang Olufsen

-0.46

Correlation Coefficient

BioPorto  Bang Olufsen

Very good diversification

The 3 months correlation between BioPorto and Bang is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen 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 Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of BioPorto i.e., BioPorto and Bang Olufsen go up and down completely randomly.

Pair Corralation between BioPorto and Bang Olufsen

Assuming the 90 days trading horizon BioPorto is expected to under-perform the Bang Olufsen. But the stock apears to be less risky and, when comparing its historical volatility, BioPorto is 1.16 times less risky than Bang Olufsen. The stock trades about -0.06 of its potential returns per unit of risk. The Bang Olufsen is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  939.00  in Bang Olufsen on December 30, 2024 and sell it today you would earn a total of  441.00  from holding Bang Olufsen or generate 46.96% return on investment over 90 days.

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

BioPorto  vs.  Bang Olufsen

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bang Olufsen

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bang Olufsen are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Bang Olufsen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioPorto and Bang Olufsen

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

The idea behind BioPorto and Bang Olufsen 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.