Correlation Between Gyldendal and Bavarian Nordic

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

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

Diversification Opportunities for Gyldendal and Bavarian Nordic

0.39

Correlation Coefficient

Gyldendal  Bavarian Nordic

Weak diversification

The 3 months correlation between Gyldendal and Bavarian is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gyldendal AS and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic and Gyldendal 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 Gyldendal AS are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Gyldendal i.e., Gyldendal and Bavarian Nordic go up and down completely randomly.

Pair Corralation between Gyldendal and Bavarian Nordic

Assuming the 90 days trading horizon Gyldendal AS is expected to under-perform the Bavarian Nordic. In addition to that, Gyldendal is 1.11 times more volatile than Bavarian Nordic. It trades about -0.01 of its total potential returns per unit of risk. Bavarian Nordic is currently generating about 0.01 per unit of volatility. If you would invest  22,660  in Bavarian Nordic on October 24, 2024 and sell it today you would lose (3,070) from holding Bavarian Nordic or give up 13.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Gyldendal AS  vs.  Bavarian Nordic

Gyldendal AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gyldendal AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat 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.

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Gyldendal and Bavarian Nordic

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

The idea behind Gyldendal AS and Bavarian Nordic 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.