Correlation Between AVTECH Sweden and Bio Works
Can any of the company-specific risk be diversified away by investing in both AVTECH Sweden and Bio Works 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 AVTECH Sweden and Bio Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVTECH Sweden AB and Bio Works Technologies AB, you can compare the effects of market volatilities on AVTECH Sweden and Bio Works 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 AVTECH Sweden with a short position of Bio Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVTECH Sweden and Bio Works.
Diversification Opportunities for AVTECH Sweden and Bio Works
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AVTECH and Bio is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding AVTECH Sweden AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies and AVTECH Sweden 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 AVTECH Sweden AB are associated (or correlated) with Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of AVTECH Sweden i.e., AVTECH Sweden and Bio Works go up and down completely randomly.
Pair Corralation between AVTECH Sweden and Bio Works
Assuming the 90 days trading horizon AVTECH Sweden AB is expected to under-perform the Bio Works. But the stock apears to be less risky and, when comparing its historical volatility, AVTECH Sweden AB is 1.36 times less risky than Bio Works. The stock trades about -0.11 of its potential returns per unit of risk. The Bio Works Technologies AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Bio Works Technologies AB on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Bio Works Technologies AB or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVTECH Sweden AB vs. Bio Works Technologies AB
Performance |
| Timeline |
| AVTECH Sweden AB |
| Bio Works Technologies |
AVTECH Sweden and Bio Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVTECH Sweden and Bio Works
The main advantage of trading using opposite AVTECH Sweden and Bio Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVTECH Sweden position performs unexpectedly, Bio Works 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 Bio Works will offset losses from the drop in Bio Works' long position.The idea behind AVTECH Sweden AB and Bio Works Technologies 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.| Bio Works vs. ExpreS2ion Biotech Holding | Bio Works vs. Hansa Biopharma AB | Bio Works vs. Saniona AB | Bio Works vs. Oncopeptides 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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