Correlation Between Xbrane Biopharma and Bactiguard Holding

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

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

Diversification Opportunities for Xbrane Biopharma and Bactiguard Holding

0.05

Correlation Coefficient

Xbrane Biopharma  Bactiguard Holding

Significant diversification

The 3 months correlation between Xbrane and Bactiguard is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Xbrane Biopharma AB and Bactiguard Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiguard Holding and Xbrane Biopharma 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 Xbrane Biopharma AB are associated (or correlated) with Bactiguard Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiguard Holding has no effect on the direction of Xbrane Biopharma i.e., Xbrane Biopharma and Bactiguard Holding go up and down completely randomly.

Pair Corralation between Xbrane Biopharma and Bactiguard Holding

Assuming the 90 days trading horizon Xbrane Biopharma AB is expected to under-perform the Bactiguard Holding. But the stock apears to be less risky and, when comparing its historical volatility, Xbrane Biopharma AB is 1.04 times less risky than Bactiguard Holding. The stock trades about -0.08 of its potential returns per unit of risk. The Bactiguard Holding AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Bactiguard Holding AB on November 29, 2024 and sell it today you would lose (220.00) from holding Bactiguard Holding AB or give up 5.95% of portfolio value over 90 days.

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

Xbrane Biopharma AB  vs.  Bactiguard Holding AB

Xbrane Biopharma

Risk-Adjusted Performance

Very Weak

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

Bactiguard Holding

Risk-Adjusted Performance

Weak

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

Pair Trading with Xbrane Biopharma and Bactiguard Holding

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

The idea behind Xbrane Biopharma AB and Bactiguard Holding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.