Correlation Between Lipidor Ab and BioInvent International

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

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

Diversification Opportunities for Lipidor Ab and BioInvent International

-0.71

Correlation Coefficient

Lipidor Ab  BioInvent International

Pay attention - limited upside

The 3 months correlation between Lipidor and BioInvent is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lipidor 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 Lipidor Ab 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 Lipidor 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 Lipidor Ab i.e., Lipidor Ab and BioInvent International go up and down completely randomly.

Pair Corralation between Lipidor Ab and BioInvent International

Assuming the 90 days trading horizon Lipidor Ab is expected to generate 2.13 times more return on investment than BioInvent International. However, Lipidor Ab is 2.13 times more volatile than BioInvent International AB. It trades about 0.43 of its potential returns per unit of risk. BioInvent International AB is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Lipidor Ab on October 8, 2024 and sell it today you would earn a total of  7.00  from holding Lipidor Ab or generate 41.18% return on investment over 90 days.

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

Lipidor Ab  vs.  BioInvent International AB

Lipidor Ab

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lipidor Ab are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lipidor Ab unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable basic indicators, BioInvent International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lipidor Ab and BioInvent International

The main advantage of trading using opposite Lipidor Ab and BioInvent International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipidor Ab 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 Lipidor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.