Correlation Between Boule Diagnostics and Sectra AB

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

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

Diversification Opportunities for Boule Diagnostics and Sectra AB

-0.61

Correlation Coefficient

Boule Diagnostics  Sectra AB

Excellent diversification

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

Pair Corralation between Boule Diagnostics and Sectra AB

Assuming the 90 days trading horizon Boule Diagnostics AB is expected to under-perform the Sectra AB. In addition to that, Boule Diagnostics is 2.38 times more volatile than Sectra AB. It trades about -0.03 of its total potential returns per unit of risk. Sectra AB is currently generating about 0.19 per unit of volatility. If you would invest  23,403  in Sectra AB on September 2, 2024 and sell it today you would earn a total of  5,067  from holding Sectra AB or generate 21.65% return on investment over 90 days.

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

Boule Diagnostics AB  vs.  Sectra AB

Boule Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boule Diagnostics AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Boule Diagnostics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sectra AB

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Sectra AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental indicators, Sectra AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boule Diagnostics and Sectra AB

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

The idea behind Boule Diagnostics AB and Sectra 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.