Correlation Between Precise Biometrics and Starbreeze

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

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

Diversification Opportunities for Precise Biometrics and Starbreeze

0.27

Correlation Coefficient

Precise Biometrics  Starbreeze

Modest diversification

The 3 months correlation between Precise and Starbreeze is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Precise Biometrics AB and Starbreeze AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbreeze AB and Precise Biometrics 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 Precise Biometrics AB are associated (or correlated) with Starbreeze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbreeze AB has no effect on the direction of Precise Biometrics i.e., Precise Biometrics and Starbreeze go up and down completely randomly.

Pair Corralation between Precise Biometrics and Starbreeze

Assuming the 90 days trading horizon Precise Biometrics AB is expected to generate 1.46 times more return on investment than Starbreeze. However, Precise Biometrics is 1.46 times more volatile than Starbreeze AB. It trades about 0.01 of its potential returns per unit of risk. Starbreeze AB is currently generating about 0.01 per unit of risk. If you would invest  500.00  in Precise Biometrics AB on December 25, 2024 and sell it today you would lose (35.00) from holding Precise Biometrics AB or give up 7.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Precise Biometrics AB  vs.  Starbreeze AB

Precise Biometrics

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Precise Biometrics AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Precise Biometrics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Starbreeze AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Precise Biometrics and Starbreeze

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

The idea behind Precise Biometrics AB and Starbreeze 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.