Correlation Between BioPorto and HH International

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

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

Diversification Opportunities for BioPorto and HH International

0.7

Correlation Coefficient

BioPorto  HH International

Poor diversification

The 3 months correlation between BioPorto and HH International is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and HH International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HH International 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 HH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HH International has no effect on the direction of BioPorto i.e., BioPorto and HH International go up and down completely randomly.

Pair Corralation between BioPorto and HH International

Assuming the 90 days trading horizon BioPorto is expected to under-perform the HH International. In addition to that, BioPorto is 2.47 times more volatile than HH International AS. It trades about -0.07 of its total potential returns per unit of risk. HH International AS is currently generating about -0.14 per unit of volatility. If you would invest  8,880  in HH International AS on October 4, 2024 and sell it today you would lose (1,010) from holding HH International AS or give up 11.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BioPorto  vs.  HH International AS

BioPorto

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HH International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HH International AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with BioPorto and HH International

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

The idea behind BioPorto and HH International AS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.