Correlation Between Moberg Pharma and Lipum AB

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

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

Diversification Opportunities for Moberg Pharma and Lipum AB

0.75

Correlation Coefficient

Moberg Pharma  Lipum AB

Poor diversification

The 3 months correlation between Moberg and Lipum is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Moberg Pharma AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and Moberg Pharma 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 Moberg Pharma AB are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Moberg Pharma i.e., Moberg Pharma and Lipum AB go up and down completely randomly.

Pair Corralation between Moberg Pharma and Lipum AB

Assuming the 90 days trading horizon Moberg Pharma AB is expected to generate 2.23 times more return on investment than Lipum AB. However, Moberg Pharma is 2.23 times more volatile than Lipum AB. It trades about 0.04 of its potential returns per unit of risk. Lipum AB is currently generating about -0.04 per unit of risk. If you would invest  1,092  in Moberg Pharma AB on September 23, 2024 and sell it today you would lose (34.00) from holding Moberg Pharma AB or give up 3.11% of portfolio value over 90 days.

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

Moberg Pharma AB  vs.  Lipum AB

Moberg Pharma AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moberg Pharma AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Moberg Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lipum AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Moberg Pharma and Lipum AB

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

The idea behind Moberg Pharma AB and Lipum 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.