Correlation Between Bavarian Nordic and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and Lipum AB 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 Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and Lipum AB, you can compare the effects of market volatilities on Bavarian Nordic and Lipum AB 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Lipum AB.
Diversification Opportunities for Bavarian Nordic and Lipum AB
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bavarian and Lipum is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Lipum AB go up and down completely randomly.
Pair Corralation between Bavarian Nordic and Lipum AB
Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Lipum AB. In addition to that, Bavarian Nordic is 1.65 times more volatile than Lipum AB. It trades about -0.07 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.31 per unit of volatility. If you would invest 1,410 in Lipum AB on August 28, 2024 and sell it today you would earn a total of 270.00 from holding Lipum AB or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bavarian Nordic vs. Lipum AB
Performance |
| Timeline |
| Bavarian Nordic |
| Lipum AB |
Bavarian Nordic and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and Lipum AB
The main advantage of trading using opposite Bavarian Nordic and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Bavarian Nordic vs. Zealand Pharma AS | Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. BioPorto | Bavarian Nordic vs. Genmab 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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