Correlation Between Xbrane Biopharma and Scibase AB

Can any of the company-specific risk be diversified away by investing in both Xbrane Biopharma and Scibase 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 Xbrane Biopharma and Scibase AB 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 Scibase AB, you can compare the effects of market volatilities on Xbrane Biopharma and Scibase 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 Xbrane Biopharma with a short position of Scibase AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xbrane Biopharma and Scibase AB.

Diversification Opportunities for Xbrane Biopharma and Scibase AB

0.48

Correlation Coefficient

Xbrane Biopharma  Scibase AB

Very weak diversification

The 3 months correlation between Xbrane and Scibase is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xbrane Biopharma AB and Scibase AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scibase AB 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 Scibase AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scibase AB has no effect on the direction of Xbrane Biopharma i.e., Xbrane Biopharma and Scibase AB go up and down completely randomly.

Pair Corralation between Xbrane Biopharma and Scibase AB

Assuming the 90 days trading horizon Xbrane Biopharma AB is expected to under-perform the Scibase AB. But the stock apears to be less risky and, when comparing its historical volatility, Xbrane Biopharma AB is 1.52 times less risky than Scibase AB. The stock trades about -0.18 of its potential returns per unit of risk. The Scibase AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Scibase AB on September 23, 2024 and sell it today you would earn a total of  3.00  from holding Scibase AB or generate 7.69% return on investment over 90 days.

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

Xbrane Biopharma AB  vs.  Scibase AB

Xbrane Biopharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xbrane Biopharma AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Xbrane Biopharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scibase AB

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Xbrane Biopharma and Scibase AB

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

The idea behind Xbrane Biopharma AB and Scibase 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.