Correlation Between Swedencare Publ and BICO Group

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

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

Diversification Opportunities for Swedencare Publ and BICO Group

-0.27

Correlation Coefficient

Swedencare Publ  BICO Group

Very good diversification

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

Pair Corralation between Swedencare Publ and BICO Group

Assuming the 90 days trading horizon Swedencare publ AB is expected to under-perform the BICO Group. But the stock apears to be less risky and, when comparing its historical volatility, Swedencare publ AB is 1.71 times less risky than BICO Group. The stock trades about -0.09 of its potential returns per unit of risk. The BICO Group AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,214  in BICO Group AB on November 30, 2024 and sell it today you would earn a total of  450.00  from holding BICO Group AB or generate 14.0% return on investment over 90 days.

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

Swedencare publ AB  vs.  BICO Group AB

Swedencare publ AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swedencare publ 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 fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BICO Group AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BICO Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BICO Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swedencare Publ and BICO Group

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

The idea behind Swedencare publ AB and BICO Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.