Correlation Between Embellence Group and Alligator Bioscience

Can any of the company-specific risk be diversified away by investing in both Embellence Group and Alligator Bioscience 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 Embellence Group and Alligator Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Embellence Group and Alligator Bioscience

0.63

Correlation Coefficient

Embellence Group  Alligator Bioscience

Poor diversification

The 3 months correlation between Embellence and Alligator is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and Alligator Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Bioscience and Embellence Group 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 Embellence Group AB are associated (or correlated) with Alligator Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Bioscience has no effect on the direction of Embellence Group i.e., Embellence Group and Alligator Bioscience go up and down completely randomly.

Pair Corralation between Embellence Group and Alligator Bioscience

Assuming the 90 days trading horizon Embellence Group is expected to generate 1.22 times less return on investment than Alligator Bioscience. But when comparing it to its historical volatility, Embellence Group AB is 3.28 times less risky than Alligator Bioscience. It trades about 0.18 of its potential returns per unit of risk. Alligator Bioscience AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Alligator Bioscience AB on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Alligator Bioscience AB or generate 4.17% return on investment over 90 days.

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

Embellence Group AB  vs.  Alligator Bioscience AB

Embellence Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embellence Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Embellence Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Alligator Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alligator Bioscience 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Embellence Group and Alligator Bioscience

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

The idea behind Embellence Group AB and Alligator Bioscience 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.