Correlation Between BIO Key and Assa Abloy

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

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

Diversification Opportunities for BIO Key and Assa Abloy

-0.48

Correlation Coefficient

BIO Key  Assa Abloy

Very good diversification

The 3 months correlation between BIO and Assa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BIO Key International and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB and BIO Key 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 BIO Key International are associated (or correlated) with Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of BIO Key i.e., BIO Key and Assa Abloy go up and down completely randomly.

Pair Corralation between BIO Key and Assa Abloy

Given the investment horizon of 90 days BIO Key International is expected to generate 17.85 times more return on investment than Assa Abloy. However, BIO Key is 17.85 times more volatile than Assa Abloy AB. It trades about 0.15 of its potential returns per unit of risk. Assa Abloy AB is currently generating about -0.27 per unit of risk. If you would invest  107.00  in BIO Key International on October 11, 2024 and sell it today you would earn a total of  37.00  from holding BIO Key International or generate 34.58% return on investment over 90 days.

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

BIO Key International  vs.  Assa Abloy AB

BIO Key International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Assa Abloy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assa Abloy AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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.

Pair Trading with BIO Key and Assa Abloy

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

The idea behind BIO Key International and Assa Abloy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..