Correlation Between Bavarian Nordic and ABVC Biopharma

Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and ABVC Biopharma 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 Bavarian Nordic and ABVC Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bavarian Nordic AS and ABVC Biopharma, you can compare the effects of market volatilities on Bavarian Nordic and ABVC Biopharma 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 Bavarian Nordic with a short position of ABVC Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and ABVC Biopharma.

Diversification Opportunities for Bavarian Nordic and ABVC Biopharma

0.41

Correlation Coefficient

Bavarian Nordic  ABVC Biopharma

Very weak diversification

The 3 months correlation between Bavarian and ABVC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic AS and ABVC Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABVC Biopharma and Bavarian Nordic 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 Bavarian Nordic AS are associated (or correlated) with ABVC Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABVC Biopharma has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and ABVC Biopharma go up and down completely randomly.

Pair Corralation between Bavarian Nordic and ABVC Biopharma

Assuming the 90 days horizon Bavarian Nordic AS is expected to under-perform the ABVC Biopharma. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bavarian Nordic AS is 1.35 times less risky than ABVC Biopharma. The pink sheet trades about -0.01 of its potential returns per unit of risk. The ABVC Biopharma is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  55.00  in ABVC Biopharma on October 7, 2024 and sell it today you would earn a total of  11.00  from holding ABVC Biopharma or generate 20.0% return on investment over 90 days.

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

Bavarian Nordic AS  vs.  ABVC Biopharma

Bavarian Nordic AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ABVC Biopharma

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ABVC Biopharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ABVC Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bavarian Nordic and ABVC Biopharma

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

The idea behind Bavarian Nordic AS and ABVC Biopharma 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.