Correlation Between Soder Sportfiske and Bio Works

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

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

Diversification Opportunities for Soder Sportfiske and Bio Works

0.52

Correlation Coefficient

Soder Sportfiske  Bio Works

Very weak diversification

The 3 months correlation between Soder and Bio is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Soder Sportfiske AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies and Soder Sportfiske 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 Soder Sportfiske AB are associated (or correlated) with Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of Soder Sportfiske i.e., Soder Sportfiske and Bio Works go up and down completely randomly.

Pair Corralation between Soder Sportfiske and Bio Works

Assuming the 90 days trading horizon Soder Sportfiske is expected to generate 1.83 times less return on investment than Bio Works. But when comparing it to its historical volatility, Soder Sportfiske AB is 1.09 times less risky than Bio Works. It trades about 0.09 of its potential returns per unit of risk. Bio Works Technologies AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  96.00  in Bio Works Technologies AB on December 30, 2024 and sell it today you would earn a total of  48.00  from holding Bio Works Technologies AB or generate 50.0% return on investment over 90 days.

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

Soder Sportfiske AB  vs.  Bio Works Technologies AB

Soder Sportfiske

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soder Sportfiske AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Soder Sportfiske unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bio Works Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Works Technologies AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Bio Works sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soder Sportfiske and Bio Works

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

The idea behind Soder Sportfiske AB and Bio Works Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.