Correlation Between Swedish Orphan and Getinge AB

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

Diversification Opportunities for Swedish Orphan and Getinge AB

0.33

Correlation Coefficient

Swedish Orphan  Getinge AB

Weak diversification

The 3 months correlation between Swedish and Getinge is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum and Getinge AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getinge AB ser 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 Getinge AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getinge AB ser has no effect on the direction of Swedish Orphan i.e., Swedish Orphan and Getinge AB go up and down completely randomly.

Pair Corralation between Swedish Orphan and Getinge AB

Assuming the 90 days trading horizon Swedish Orphan Biovitrum is expected to under-perform the Getinge AB. But the stock apears to be less risky and, when comparing its historical volatility, Swedish Orphan Biovitrum is 1.18 times less risky than Getinge AB. The stock trades about -0.07 of its potential returns per unit of risk. The Getinge AB ser is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  17,225  in Getinge AB ser on December 11, 2024 and sell it today you would earn a total of  4,265  from holding Getinge AB ser or generate 24.76% return on investment over 90 days.

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

Swedish Orphan Biovitrum  vs.  Getinge AB ser

Swedish Orphan Biovitrum

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Getinge AB ser

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Getinge AB ser are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Getinge AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swedish Orphan and Getinge AB

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

The idea behind Swedish Orphan Biovitrum and Getinge AB ser 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.