Correlation Between Egetis Therapeutics and Hansa Biopharma

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

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

Diversification Opportunities for Egetis Therapeutics and Hansa Biopharma

0.09

Correlation Coefficient

Egetis Therapeutics  Hansa Biopharma

Significant diversification

The 3 months correlation between Egetis and Hansa is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Egetis Therapeutics AB and Hansa Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Biopharma AB and Egetis Therapeutics 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 Egetis Therapeutics AB are associated (or correlated) with Hansa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Biopharma AB has no effect on the direction of Egetis Therapeutics i.e., Egetis Therapeutics and Hansa Biopharma go up and down completely randomly.

Pair Corralation between Egetis Therapeutics and Hansa Biopharma

Assuming the 90 days trading horizon Egetis Therapeutics is expected to generate 1.43 times less return on investment than Hansa Biopharma. In addition to that, Egetis Therapeutics is 1.06 times more volatile than Hansa Biopharma AB. It trades about 0.03 of its total potential returns per unit of risk. Hansa Biopharma AB is currently generating about 0.05 per unit of volatility. If you would invest  2,308  in Hansa Biopharma AB on September 2, 2024 and sell it today you would earn a total of  942.00  from holding Hansa Biopharma AB or generate 40.81% return on investment over 90 days.

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

Egetis Therapeutics AB  vs.  Hansa Biopharma AB

Egetis Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hansa Biopharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansa Biopharma AB 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Egetis Therapeutics and Hansa Biopharma

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

The idea behind Egetis Therapeutics AB and Hansa Biopharma 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.