Correlation Between Ultimovacs ASA and Bergenbio ASA

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

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

Diversification Opportunities for Ultimovacs ASA and Bergenbio ASA

0.31

Correlation Coefficient

Ultimovacs ASA  Bergenbio ASA

Weak diversification

The 3 months correlation between Ultimovacs and Bergenbio is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ultimovacs ASA and Bergenbio ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergenbio ASA and Ultimovacs ASA 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 Ultimovacs ASA are associated (or correlated) with Bergenbio ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergenbio ASA has no effect on the direction of Ultimovacs ASA i.e., Ultimovacs ASA and Bergenbio ASA go up and down completely randomly.

Pair Corralation between Ultimovacs ASA and Bergenbio ASA

Assuming the 90 days trading horizon Ultimovacs ASA is expected to generate 0.35 times more return on investment than Bergenbio ASA. However, Ultimovacs ASA is 2.87 times less risky than Bergenbio ASA. It trades about 0.09 of its potential returns per unit of risk. Bergenbio ASA is currently generating about -0.13 per unit of risk. If you would invest  193.00  in Ultimovacs ASA on December 1, 2024 and sell it today you would earn a total of  36.00  from holding Ultimovacs ASA or generate 18.65% return on investment over 90 days.

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

Ultimovacs ASA  vs.  Bergenbio ASA

Ultimovacs ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimovacs ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ultimovacs ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bergenbio ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bergenbio ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ultimovacs ASA and Bergenbio ASA

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

The idea behind Ultimovacs ASA and Bergenbio ASA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.