Correlation Between Active Biotech and BioArctic
Can any of the company-specific risk be diversified away by investing in both Active Biotech and BioArctic 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 Active Biotech and BioArctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Active Biotech AB and BioArctic AB, you can compare the effects of market volatilities on Active Biotech and BioArctic 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 Active Biotech with a short position of BioArctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Biotech and BioArctic.
Diversification Opportunities for Active Biotech and BioArctic
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Active and BioArctic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Active Biotech AB and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and Active Biotech 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 Active Biotech AB are associated (or correlated) with BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of Active Biotech i.e., Active Biotech and BioArctic go up and down completely randomly.
Pair Corralation between Active Biotech and BioArctic
Assuming the 90 days trading horizon Active Biotech AB is expected to generate 2.81 times more return on investment than BioArctic. However, Active Biotech is 2.81 times more volatile than BioArctic AB. It trades about 0.15 of its potential returns per unit of risk. BioArctic AB is currently generating about 0.2 per unit of risk. If you would invest 19.00 in Active Biotech AB on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Active Biotech AB or generate 42.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Active Biotech AB vs. BioArctic AB
Performance |
| Timeline |
| Active Biotech AB |
| BioArctic AB |
Active Biotech and BioArctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Biotech and BioArctic
The main advantage of trading using opposite Active Biotech and BioArctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Biotech position performs unexpectedly, BioArctic 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 BioArctic will offset losses from the drop in BioArctic's long position.| Active Biotech vs. Cantargia AB | Active Biotech vs. BioArctic AB | Active Biotech vs. Oncopeptides AB | Active Biotech vs. Hansa Biopharma AB |
| BioArctic vs. Oncopeptides AB | BioArctic vs. Camurus AB | BioArctic vs. Hansa Biopharma AB | BioArctic vs. Cantargia AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |