Correlation Between Scandinavian Enviro and Xbrane Biopharma

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

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

Diversification Opportunities for Scandinavian Enviro and Xbrane Biopharma

0.36

Correlation Coefficient

Scandinavian Enviro  Xbrane Biopharma

Weak diversification

The 3 months correlation between Scandinavian and Xbrane is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Enviro Systems and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma and Scandinavian Enviro 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 Scandinavian Enviro Systems are associated (or correlated) with Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of Scandinavian Enviro i.e., Scandinavian Enviro and Xbrane Biopharma go up and down completely randomly.

Pair Corralation between Scandinavian Enviro and Xbrane Biopharma

Assuming the 90 days trading horizon Scandinavian Enviro Systems is expected to generate 0.81 times more return on investment than Xbrane Biopharma. However, Scandinavian Enviro Systems is 1.24 times less risky than Xbrane Biopharma. It trades about 0.15 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about 0.02 per unit of risk. If you would invest  184.00  in Scandinavian Enviro Systems on October 5, 2024 and sell it today you would earn a total of  15.00  from holding Scandinavian Enviro Systems or generate 8.15% return on investment over 90 days.

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

Scandinavian Enviro Systems  vs.  Xbrane Biopharma AB

Scandinavian Enviro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Enviro Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scandinavian Enviro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Xbrane Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Scandinavian Enviro and Xbrane Biopharma

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

The idea behind Scandinavian Enviro Systems and Xbrane Biopharma 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.