Correlation Between Swedish Orphan and BioInvent International

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

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

Diversification Opportunities for Swedish Orphan and BioInvent International

0.07

Correlation Coefficient

Swedish Orphan  BioInvent International

Significant diversification

The 3 months correlation between Swedish and BioInvent is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum and BioInvent International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioInvent International and Swedish Orphan 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 Swedish Orphan Biovitrum are associated (or correlated) with BioInvent International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioInvent International has no effect on the direction of Swedish Orphan i.e., Swedish Orphan and BioInvent International go up and down completely randomly.

Pair Corralation between Swedish Orphan and BioInvent International

Assuming the 90 days trading horizon Swedish Orphan Biovitrum is expected to under-perform the BioInvent International. But the stock apears to be less risky and, when comparing its historical volatility, Swedish Orphan Biovitrum is 1.65 times less risky than BioInvent International. The stock trades about -0.02 of its potential returns per unit of risk. The BioInvent International AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,010  in BioInvent International AB on September 3, 2024 and sell it today you would earn a total of  290.00  from holding BioInvent International AB or generate 7.23% return on investment over 90 days.

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

Swedish Orphan Biovitrum  vs.  BioInvent International AB

Swedish Orphan Biovitrum

Risk-Adjusted Performance

0 of 100

Very Weak

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

BioInvent International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioInvent International AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BioInvent International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Swedish Orphan and BioInvent International

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

The idea behind Swedish Orphan Biovitrum and BioInvent 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.