Correlation Between Starbreeze and Moberg Pharma

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

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

Diversification Opportunities for Starbreeze and Moberg Pharma

-0.6

Correlation Coefficient

Starbreeze  Moberg Pharma

Excellent diversification

The 3 months correlation between Starbreeze and Moberg is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Starbreeze AB and Moberg Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moberg Pharma AB and Starbreeze 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 Starbreeze AB are associated (or correlated) with Moberg Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moberg Pharma AB has no effect on the direction of Starbreeze i.e., Starbreeze and Moberg Pharma go up and down completely randomly.

Pair Corralation between Starbreeze and Moberg Pharma

Assuming the 90 days trading horizon Starbreeze AB is expected to under-perform the Moberg Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Starbreeze AB is 1.65 times less risky than Moberg Pharma. The stock trades about -0.06 of its potential returns per unit of risk. The Moberg Pharma AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,673  in Moberg Pharma AB on October 4, 2024 and sell it today you would lose (656.00) from holding Moberg Pharma AB or give up 39.21% of portfolio value over 90 days.

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

Starbreeze AB  vs.  Moberg Pharma AB

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Moberg Pharma AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moberg Pharma AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Moberg Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Starbreeze and Moberg Pharma

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

The idea behind Starbreeze AB and Moberg Pharma 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.