Correlation Between Biotage AB and BioInvent International

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

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

Diversification Opportunities for Biotage AB and BioInvent International

0.82

Correlation Coefficient

Biotage AB  BioInvent International

Very poor diversification

The 3 months correlation between Biotage and BioInvent is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Biotage AB and BioInvent International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioInvent International and Biotage AB 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 Biotage AB are associated (or correlated) with BioInvent International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioInvent International has no effect on the direction of Biotage AB i.e., Biotage AB and BioInvent International go up and down completely randomly.

Pair Corralation between Biotage AB and BioInvent International

Assuming the 90 days trading horizon Biotage AB is expected to generate 1.14 times more return on investment than BioInvent International. However, Biotage AB is 1.14 times more volatile than BioInvent International AB. It trades about -0.13 of its potential returns per unit of risk. BioInvent International AB is currently generating about -0.21 per unit of risk. If you would invest  15,730  in Biotage AB on December 2, 2024 and sell it today you would lose (4,580) from holding Biotage AB or give up 29.12% of portfolio value over 90 days.

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

Biotage AB  vs.  BioInvent International AB

Biotage AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biotage AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BioInvent International

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioInvent International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Biotage AB and BioInvent International

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

The idea behind Biotage AB and BioInvent International 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.