Correlation Between Sdiptech and Bio Works

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

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

Diversification Opportunities for Sdiptech and Bio Works

-0.1

Correlation Coefficient

Sdiptech  Bio Works

Good diversification

The 3 months correlation between Sdiptech and Bio is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sdiptech AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies and Sdiptech 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 Sdiptech AB are associated (or correlated) with Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of Sdiptech i.e., Sdiptech and Bio Works go up and down completely randomly.

Pair Corralation between Sdiptech and Bio Works

Assuming the 90 days trading horizon Sdiptech AB is expected to generate 0.2 times more return on investment than Bio Works. However, Sdiptech AB is 4.99 times less risky than Bio Works. It trades about 0.05 of its potential returns per unit of risk. Bio Works Technologies AB is currently generating about -0.1 per unit of risk. If you would invest  12,155  in Sdiptech AB on September 15, 2024 and sell it today you would earn a total of  295.00  from holding Sdiptech AB or generate 2.43% return on investment over 90 days.

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

Sdiptech AB  vs.  Bio Works Technologies AB

Sdiptech AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sdiptech AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Sdiptech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Bio Works Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Works Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sdiptech and Bio Works

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

The idea behind Sdiptech AB and Bio Works Technologies 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.