Correlation Between Senzime AB and Orexo AB

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

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

Diversification Opportunities for Senzime AB and Orexo AB

-0.45

Correlation Coefficient

Senzime AB  Orexo AB

Very good diversification

The 3 months correlation between Senzime and Orexo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Senzime AB and Orexo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orexo AB and Senzime AB 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 Senzime AB are associated (or correlated) with Orexo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orexo AB has no effect on the direction of Senzime AB i.e., Senzime AB and Orexo AB go up and down completely randomly.

Pair Corralation between Senzime AB and Orexo AB

Assuming the 90 days trading horizon Senzime AB is expected to under-perform the Orexo AB. But the stock apears to be less risky and, when comparing its historical volatility, Senzime AB is 2.8 times less risky than Orexo AB. The stock trades about -0.13 of its potential returns per unit of risk. The Orexo AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Orexo AB on October 7, 2024 and sell it today you would earn a total of  790.00  from holding Orexo AB or generate 71.82% return on investment over 90 days.

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

Senzime AB  vs.  Orexo AB

Senzime AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senzime AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Orexo AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orexo AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Orexo AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senzime AB and Orexo AB

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

The idea behind Senzime AB and Orexo 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.