Correlation Between Swedish Orphan and Vitrolife

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

Diversification Opportunities for Swedish Orphan and Vitrolife

0.41

Correlation Coefficient

Swedish Orphan  Vitrolife

Very weak diversification

The 3 months correlation between Swedish and Vitrolife is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum and Vitrolife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitrolife AB 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 Vitrolife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitrolife AB has no effect on the direction of Swedish Orphan i.e., Swedish Orphan and Vitrolife go up and down completely randomly.

Pair Corralation between Swedish Orphan and Vitrolife

Assuming the 90 days trading horizon Swedish Orphan Biovitrum is expected to generate 1.01 times more return on investment than Vitrolife. However, Swedish Orphan is 1.01 times more volatile than Vitrolife AB. It trades about 0.0 of its potential returns per unit of risk. Vitrolife AB is currently generating about -0.08 per unit of risk. If you would invest  30,960  in Swedish Orphan Biovitrum on September 4, 2024 and sell it today you would lose (420.00) from holding Swedish Orphan Biovitrum or give up 1.36% of portfolio value over 90 days.

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

Swedish Orphan Biovitrum  vs.  Vitrolife 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.

Vitrolife AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vitrolife AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Swedish Orphan and Vitrolife

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

The idea behind Swedish Orphan Biovitrum and Vitrolife 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.