Correlation Between Sedana Medical and Biovica International

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

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

Diversification Opportunities for Sedana Medical and Biovica International

0.83

Correlation Coefficient

Sedana Medical  Biovica International

Very poor diversification

The 3 months correlation between Sedana and Biovica is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sedana Medical AB and Biovica International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biovica International and Sedana Medical 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 Sedana Medical AB are associated (or correlated) with Biovica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biovica International has no effect on the direction of Sedana Medical i.e., Sedana Medical and Biovica International go up and down completely randomly.

Pair Corralation between Sedana Medical and Biovica International

Assuming the 90 days trading horizon Sedana Medical AB is expected to under-perform the Biovica International. In addition to that, Sedana Medical is 1.11 times more volatile than Biovica International AB. It trades about -0.14 of its total potential returns per unit of risk. Biovica International AB is currently generating about -0.03 per unit of volatility. If you would invest  267.00  in Biovica International AB on September 3, 2024 and sell it today you would lose (37.00) from holding Biovica International AB or give up 13.86% of portfolio value over 90 days.

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

Sedana Medical AB  vs.  Biovica International AB

Sedana Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sedana Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental 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.

Biovica International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biovica International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sedana Medical and Biovica International

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

The idea behind Sedana Medical AB and Biovica International 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.