Correlation Between BioPorto and Netcompany Group

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

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

Diversification Opportunities for BioPorto and Netcompany Group

-0.76

Correlation Coefficient

BioPorto  Netcompany Group

Pay attention - limited upside

The 3 months correlation between BioPorto and Netcompany is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and Netcompany Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcompany Group 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 Netcompany Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcompany Group has no effect on the direction of BioPorto i.e., BioPorto and Netcompany Group go up and down completely randomly.

Pair Corralation between BioPorto and Netcompany Group

Assuming the 90 days trading horizon BioPorto is expected to under-perform the Netcompany Group. In addition to that, BioPorto is 1.3 times more volatile than Netcompany Group AS. It trades about -0.13 of its total potential returns per unit of risk. Netcompany Group AS is currently generating about 0.14 per unit of volatility. If you would invest  29,960  in Netcompany Group AS on September 3, 2024 and sell it today you would earn a total of  5,200  from holding Netcompany Group AS or generate 17.36% return on investment over 90 days.

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

BioPorto  vs.  Netcompany Group 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Netcompany Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Netcompany Group AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Netcompany Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioPorto and Netcompany Group

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

The idea behind BioPorto and Netcompany Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.