Correlation Between Avax SA and Bioter SA

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Can any of the company-specific risk be diversified away by investing in both Avax SA and Bioter SA 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 Avax SA and Bioter SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avax SA and Bioter SA, you can compare the effects of market volatilities on Avax SA and Bioter SA 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 Avax SA with a short position of Bioter SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avax SA and Bioter SA.

Diversification Opportunities for Avax SA and Bioter SA

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Avax and Bioter is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avax SA and Bioter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioter SA and Avax SA 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 Avax SA are associated (or correlated) with Bioter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioter SA has no effect on the direction of Avax SA i.e., Avax SA and Bioter SA go up and down completely randomly.

Pair Corralation between Avax SA and Bioter SA

Assuming the 90 days trading horizon Avax SA is expected to generate 0.52 times more return on investment than Bioter SA. However, Avax SA is 1.93 times less risky than Bioter SA. It trades about 0.07 of its potential returns per unit of risk. Bioter SA is currently generating about 0.02 per unit of risk. If you would invest  87.00  in Avax SA on October 25, 2024 and sell it today you would earn a total of  95.00  from holding Avax SA or generate 109.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.87%
ValuesDaily Returns

Avax SA  vs.  Bioter SA

 Performance 
       Timeline  
Avax SA 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Avax SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Avax SA unveiled solid returns over the last few months and may actually be approaching a breakup point.
Bioter SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bioter SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Avax SA and Bioter SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avax SA and Bioter SA

The main advantage of trading using opposite Avax SA and Bioter SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avax SA position performs unexpectedly, Bioter SA 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 Bioter SA will offset losses from the drop in Bioter SA's long position.
The idea behind Avax SA and Bioter SA 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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