Correlation Between BioPorto and Newcap Holding

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

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

Diversification Opportunities for BioPorto and Newcap Holding

-0.06

Correlation Coefficient

BioPorto  Newcap Holding

Good diversification

The 3 months correlation between BioPorto and Newcap is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and Newcap Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcap Holding AS 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 Newcap Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcap Holding AS has no effect on the direction of BioPorto i.e., BioPorto and Newcap Holding go up and down completely randomly.

Pair Corralation between BioPorto and Newcap Holding

Assuming the 90 days trading horizon BioPorto is expected to generate 4.27 times less return on investment than Newcap Holding. But when comparing it to its historical volatility, BioPorto is 2.99 times less risky than Newcap Holding. It trades about 0.02 of its potential returns per unit of risk. Newcap Holding AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Newcap Holding AS on October 4, 2024 and sell it today you would lose (12.00) from holding Newcap Holding AS or give up 57.14% of portfolio value over 90 days.

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

BioPorto  vs.  Newcap Holding 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 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.

Newcap Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcap Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Newcap Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BioPorto and Newcap Holding

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

The idea behind BioPorto and Newcap Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.