Correlation Between Bonesupport Holding and Scibase AB

Can any of the company-specific risk be diversified away by investing in both Bonesupport Holding and Scibase 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 Bonesupport Holding and Scibase AB 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 Scibase AB, you can compare the effects of market volatilities on Bonesupport Holding and Scibase 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 Bonesupport Holding with a short position of Scibase AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonesupport Holding and Scibase AB.

Diversification Opportunities for Bonesupport Holding and Scibase AB

-0.55

Correlation Coefficient

Bonesupport Holding  Scibase AB

Excellent diversification

The 3 months correlation between Bonesupport and Scibase is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bonesupport Holding AB and Scibase AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scibase AB 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 Scibase AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scibase AB has no effect on the direction of Bonesupport Holding i.e., Bonesupport Holding and Scibase AB go up and down completely randomly.

Pair Corralation between Bonesupport Holding and Scibase AB

Assuming the 90 days trading horizon Bonesupport Holding AB is expected to generate 0.45 times more return on investment than Scibase AB. However, Bonesupport Holding AB is 2.24 times less risky than Scibase AB. It trades about 0.13 of its potential returns per unit of risk. Scibase AB is currently generating about 0.04 per unit of risk. If you would invest  31,300  in Bonesupport Holding AB on September 23, 2024 and sell it today you would earn a total of  6,900  from holding Bonesupport Holding AB or generate 22.04% return on investment over 90 days.

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

Bonesupport Holding AB  vs.  Scibase AB

Bonesupport Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bonesupport Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scibase AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scibase AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Scibase AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bonesupport Holding and Scibase AB

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

The idea behind Bonesupport Holding AB and Scibase 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.