Correlation Between Stille AB and BioGaia AB

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

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

Diversification Opportunities for Stille AB and BioGaia AB

-0.28

Correlation Coefficient

Stille AB  BioGaia AB

Very good diversification

The 3 months correlation between Stille and BioGaia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and BioGaia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioGaia AB and Stille AB 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 Stille AB are associated (or correlated) with BioGaia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioGaia AB has no effect on the direction of Stille AB i.e., Stille AB and BioGaia AB go up and down completely randomly.

Pair Corralation between Stille AB and BioGaia AB

Assuming the 90 days trading horizon Stille AB is expected to generate 1.14 times more return on investment than BioGaia AB. However, Stille AB is 1.14 times more volatile than BioGaia AB. It trades about 0.07 of its potential returns per unit of risk. BioGaia AB is currently generating about 0.03 per unit of risk. If you would invest  14,850  in Stille AB on September 25, 2024 and sell it today you would earn a total of  5,850  from holding Stille AB or generate 39.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Stille AB  vs.  BioGaia AB

Stille AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

BioGaia AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioGaia AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BioGaia AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stille AB and BioGaia AB

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

The idea behind Stille AB and BioGaia 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.