Correlation Between Active Biotech and Hansa Biopharma
Can any of the company-specific risk be diversified away by investing in both Active Biotech and Hansa Biopharma 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 Hansa Biopharma 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 Hansa Biopharma AB, you can compare the effects of market volatilities on Active Biotech and Hansa Biopharma 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 Hansa Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Biotech and Hansa Biopharma.
Diversification Opportunities for Active Biotech and Hansa Biopharma
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Active and Hansa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Active Biotech AB and Hansa Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Biopharma 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 Hansa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Biopharma AB has no effect on the direction of Active Biotech i.e., Active Biotech and Hansa Biopharma go up and down completely randomly.
Pair Corralation between Active Biotech and Hansa Biopharma
Assuming the 90 days trading horizon Active Biotech AB is expected to generate 5.86 times more return on investment than Hansa Biopharma. However, Active Biotech is 5.86 times more volatile than Hansa Biopharma AB. It trades about 0.15 of its potential returns per unit of risk. Hansa Biopharma AB is currently generating about -0.13 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Active Biotech AB vs. Hansa Biopharma AB
Performance |
| Timeline |
| Active Biotech AB |
| Hansa Biopharma AB |
Active Biotech and Hansa Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Biotech and Hansa Biopharma
The main advantage of trading using opposite Active Biotech and Hansa Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Biotech position performs unexpectedly, Hansa Biopharma 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 Hansa Biopharma will offset losses from the drop in Hansa Biopharma's long position.| Active Biotech vs. Cantargia AB | Active Biotech vs. BioArctic AB | Active Biotech vs. Oncopeptides AB | Active Biotech vs. Hansa Biopharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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