Correlation Between Bonesupport Holding and RaySearch Laboratories

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

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

Diversification Opportunities for Bonesupport Holding and RaySearch Laboratories

0.79

Correlation Coefficient

Bonesupport Holding  RaySearch Laboratories

Poor diversification

The 3 months correlation between Bonesupport and RaySearch is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bonesupport Holding AB and RaySearch Laboratories AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaySearch Laboratories and Bonesupport Holding 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 Bonesupport Holding AB are associated (or correlated) with RaySearch Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaySearch Laboratories has no effect on the direction of Bonesupport Holding i.e., Bonesupport Holding and RaySearch Laboratories go up and down completely randomly.

Pair Corralation between Bonesupport Holding and RaySearch Laboratories

Assuming the 90 days trading horizon Bonesupport Holding is expected to generate 1.73 times less return on investment than RaySearch Laboratories. But when comparing it to its historical volatility, Bonesupport Holding AB is 1.1 times less risky than RaySearch Laboratories. It trades about 0.08 of its potential returns per unit of risk. RaySearch Laboratories AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  16,460  in RaySearch Laboratories AB on September 12, 2024 and sell it today you would earn a total of  3,840  from holding RaySearch Laboratories AB or generate 23.33% return on investment over 90 days.

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

Bonesupport Holding AB  vs.  RaySearch Laboratories AB

Bonesupport Holding

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bonesupport Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

RaySearch Laboratories

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RaySearch Laboratories AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RaySearch Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bonesupport Holding and RaySearch Laboratories

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

The idea behind Bonesupport Holding AB and RaySearch Laboratories 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.