Correlation Between Isofol Medical and BioInvent International

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

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

Diversification Opportunities for Isofol Medical and BioInvent International

0.26

Correlation Coefficient

Isofol Medical  BioInvent International

Modest diversification

The 3 months correlation between Isofol and BioInvent is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Isofol Medical AB and BioInvent International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioInvent International and Isofol Medical 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 Isofol Medical AB are associated (or correlated) with BioInvent International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioInvent International has no effect on the direction of Isofol Medical i.e., Isofol Medical and BioInvent International go up and down completely randomly.

Pair Corralation between Isofol Medical and BioInvent International

Assuming the 90 days trading horizon Isofol Medical AB is expected to under-perform the BioInvent International. In addition to that, Isofol Medical is 2.12 times more volatile than BioInvent International AB. It trades about -0.21 of its total potential returns per unit of risk. BioInvent International AB is currently generating about -0.31 per unit of volatility. If you would invest  4,455  in BioInvent International AB on September 23, 2024 and sell it today you would lose (565.00) from holding BioInvent International AB or give up 12.68% of portfolio value over 90 days.

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

Isofol Medical AB  vs.  BioInvent International AB

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

BioInvent International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioInvent International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Isofol Medical and BioInvent International

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

The idea behind Isofol Medical AB and BioInvent International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.