Correlation Between BBS Bioactive and Fondia Oyj

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

By analyzing existing cross correlation between BBS Bioactive Bone Substitutes and Fondia Oyj, you can compare the effects of market volatilities on BBS Bioactive and Fondia Oyj 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 BBS Bioactive with a short position of Fondia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBS Bioactive and Fondia Oyj.

Diversification Opportunities for BBS Bioactive and Fondia Oyj

-0.61

Correlation Coefficient

BBS Bioactive  Fondia Oyj

Excellent diversification

The 3 months correlation between BBS and Fondia is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BBS Bioactive Bone Substitutes and Fondia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondia Oyj and BBS Bioactive 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 BBS Bioactive Bone Substitutes are associated (or correlated) with Fondia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondia Oyj has no effect on the direction of BBS Bioactive i.e., BBS Bioactive and Fondia Oyj go up and down completely randomly.

Pair Corralation between BBS Bioactive and Fondia Oyj

Assuming the 90 days trading horizon BBS Bioactive is expected to generate 1.16 times less return on investment than Fondia Oyj. In addition to that, BBS Bioactive is 2.16 times more volatile than Fondia Oyj. It trades about 0.03 of its total potential returns per unit of risk. Fondia Oyj is currently generating about 0.07 per unit of volatility. If you would invest  447.00  in Fondia Oyj on December 30, 2024 and sell it today you would earn a total of  43.00  from holding Fondia Oyj or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

BBS Bioactive Bone Substitutes  vs.  Fondia Oyj

BBS Bioactive Bone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BBS Bioactive Bone Substitutes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, BBS Bioactive may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fondia Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fondia Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Fondia Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BBS Bioactive and Fondia Oyj

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

The idea behind BBS Bioactive Bone Substitutes and Fondia Oyj 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.