Correlation Between Alfen NV and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Alfen NV and Lion Biotechnologies 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 Alfen NV and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfen NV and Lion Biotechnologies, you can compare the effects of market volatilities on Alfen NV and Lion Biotechnologies 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 Alfen NV with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and Lion Biotechnologies.
Diversification Opportunities for Alfen NV and Lion Biotechnologies
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alfen and Lion is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Alfen NV 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 Alfen NV are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Alfen NV i.e., Alfen NV and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Alfen NV and Lion Biotechnologies
Assuming the 90 days horizon Alfen NV is expected to generate 0.84 times more return on investment than Lion Biotechnologies. However, Alfen NV is 1.2 times less risky than Lion Biotechnologies. It trades about 0.08 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.27 per unit of risk. If you would invest 1,198 in Alfen NV on October 15, 2024 and sell it today you would earn a total of 40.00 from holding Alfen NV or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfen NV vs. Lion Biotechnologies
Performance |
| Timeline |
| Alfen NV |
| Lion Biotechnologies |
Alfen NV and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfen NV and Lion Biotechnologies
The main advantage of trading using opposite Alfen NV and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfen NV position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Alfen NV vs. Scottish Mortgage Investment | Alfen NV vs. New Residential Investment | Alfen NV vs. HK Electric Investments | Alfen NV vs. WisdomTree Investments |
| Lion Biotechnologies vs. KINGBOARD CHEMICAL | Lion Biotechnologies vs. GRUPO CARSO A1 | Lion Biotechnologies vs. CHEMICAL INDUSTRIES | Lion Biotechnologies vs. Grupo Carso SAB |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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