Correlation Between Orexo AB and AroCell AB

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

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

Diversification Opportunities for Orexo AB and AroCell AB

-0.34

Correlation Coefficient

Orexo AB  AroCell AB

Very good diversification

The 3 months correlation between Orexo and AroCell is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Orexo AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Orexo 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 Orexo AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Orexo AB i.e., Orexo AB and AroCell AB go up and down completely randomly.

Pair Corralation between Orexo AB and AroCell AB

Assuming the 90 days trading horizon Orexo AB is expected to generate 1.24 times more return on investment than AroCell AB. However, Orexo AB is 1.24 times more volatile than AroCell AB. It trades about 0.22 of its potential returns per unit of risk. AroCell AB is currently generating about 0.05 per unit of risk. If you would invest  1,384  in Orexo AB on October 1, 2024 and sell it today you would earn a total of  376.00  from holding Orexo AB or generate 27.17% return on investment over 90 days.

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

Orexo AB  vs.  AroCell AB

Orexo AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orexo AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Orexo AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

AroCell AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orexo AB and AroCell AB

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

The idea behind Orexo AB and AroCell 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.