Correlation Between Bavarian Nordic and Alefarm Brewing
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and Alefarm Brewing 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 Bavarian Nordic and Alefarm Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and Alefarm Brewing AS, you can compare the effects of market volatilities on Bavarian Nordic and Alefarm Brewing 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 Bavarian Nordic with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Alefarm Brewing.
Diversification Opportunities for Bavarian Nordic and Alefarm Brewing
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bavarian and Alefarm is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Alefarm Brewing go up and down completely randomly.
Pair Corralation between Bavarian Nordic and Alefarm Brewing
Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 2.16 times less return on investment than Alefarm Brewing. But when comparing it to its historical volatility, Bavarian Nordic is 1.55 times less risky than Alefarm Brewing. It trades about 0.01 of its potential returns per unit of risk. Alefarm Brewing AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 244.00 in Alefarm Brewing AS on August 27, 2024 and sell it today you would lose (75.00) from holding Alefarm Brewing AS or give up 30.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bavarian Nordic vs. Alefarm Brewing AS
Performance |
| Timeline |
| Bavarian Nordic |
| Alefarm Brewing AS |
Bavarian Nordic and Alefarm Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and Alefarm Brewing
The main advantage of trading using opposite Bavarian Nordic and Alefarm Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, Alefarm Brewing 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 Alefarm Brewing will offset losses from the drop in Alefarm Brewing's long position.| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina AS |
| Alefarm Brewing vs. Sparinvest INDEX Globale | Alefarm Brewing vs. Bavarian Nordic | Alefarm Brewing vs. Investeringsselskabet Luxor AS | Alefarm Brewing vs. cBrain AS |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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