Correlation Between Swedencare Publ and Bonesupport Holding

Can any of the company-specific risk be diversified away by investing in both Swedencare Publ and Bonesupport 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 Swedencare Publ and Bonesupport Holding 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 Bonesupport Holding AB, you can compare the effects of market volatilities on Swedencare Publ and Bonesupport 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 Swedencare Publ with a short position of Bonesupport Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedencare Publ and Bonesupport Holding.

Diversification Opportunities for Swedencare Publ and Bonesupport Holding

0.02

Correlation Coefficient

Swedencare Publ  Bonesupport Holding

Significant diversification

The 3 months correlation between Swedencare and Bonesupport is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Swedencare publ AB and Bonesupport Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonesupport Holding 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 Bonesupport Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonesupport Holding has no effect on the direction of Swedencare Publ i.e., Swedencare Publ and Bonesupport Holding go up and down completely randomly.

Pair Corralation between Swedencare Publ and Bonesupport Holding

Assuming the 90 days trading horizon Swedencare Publ is expected to generate 2.99 times less return on investment than Bonesupport Holding. But when comparing it to its historical volatility, Swedencare publ AB is 1.25 times less risky than Bonesupport Holding. It trades about 0.03 of its potential returns per unit of risk. Bonesupport Holding AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  34,000  in Bonesupport Holding AB on October 25, 2024 and sell it today you would earn a total of  3,340  from holding Bonesupport Holding AB or generate 9.82% return on investment over 90 days.

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

Swedencare publ AB  vs.  Bonesupport Holding AB

Swedencare publ AB

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swedencare publ AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Swedencare Publ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bonesupport Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bonesupport Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Swedencare Publ and Bonesupport Holding

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

The idea behind Swedencare publ AB and Bonesupport 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.