Correlation Between Biotage AB and Mentice AB

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

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

Diversification Opportunities for Biotage AB and Mentice AB

0.71

Correlation Coefficient

Biotage AB  Mentice AB

Poor diversification

The 3 months correlation between Biotage and Mentice is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Biotage AB and Mentice AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentice AB 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 Mentice AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentice AB has no effect on the direction of Biotage AB i.e., Biotage AB and Mentice AB go up and down completely randomly.

Pair Corralation between Biotage AB and Mentice AB

Assuming the 90 days trading horizon Biotage AB is expected to generate 0.67 times more return on investment than Mentice AB. However, Biotage AB is 1.49 times less risky than Mentice AB. It trades about 0.04 of its potential returns per unit of risk. Mentice AB is currently generating about -0.06 per unit of risk. If you would invest  13,240  in Biotage AB on September 24, 2024 and sell it today you would earn a total of  2,730  from holding Biotage AB or generate 20.62% return on investment over 90 days.

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

Biotage AB  vs.  Mentice AB

Biotage AB

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mentice AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mentice AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Biotage AB and Mentice AB

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

The idea behind Biotage AB and Mentice 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.