Correlation Between Polygiene and Diadrom Holding

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

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

Diversification Opportunities for Polygiene and Diadrom Holding

0.06

Correlation Coefficient

Polygiene  Diadrom Holding

Significant diversification

The 3 months correlation between Polygiene and Diadrom is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Polygiene AB and Diadrom Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diadrom Holding AB and Polygiene 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 Polygiene AB are associated (or correlated) with Diadrom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diadrom Holding AB has no effect on the direction of Polygiene i.e., Polygiene and Diadrom Holding go up and down completely randomly.

Pair Corralation between Polygiene and Diadrom Holding

Assuming the 90 days trading horizon Polygiene AB is expected to under-perform the Diadrom Holding. But the stock apears to be less risky and, when comparing its historical volatility, Polygiene AB is 1.16 times less risky than Diadrom Holding. The stock trades about -0.14 of its potential returns per unit of risk. The Diadrom Holding AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  680.00  in Diadrom Holding AB on December 30, 2024 and sell it today you would earn a total of  128.00  from holding Diadrom Holding AB or generate 18.82% return on investment over 90 days.

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

Polygiene AB  vs.  Diadrom Holding AB

Polygiene AB

Risk-Adjusted Performance

Very Weak

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

Diadrom Holding AB

Risk-Adjusted Performance

OK

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

Pair Trading with Polygiene and Diadrom Holding

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

The idea behind Polygiene AB and Diadrom Holding 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.