Correlation Between BICO Group and Novacyt SA
Can any of the company-specific risk be diversified away by investing in both BICO Group and Novacyt 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 BICO Group and Novacyt SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BICO Group AB and Novacyt SA, you can compare the effects of market volatilities on BICO Group and Novacyt 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 BICO Group with a short position of Novacyt SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BICO Group and Novacyt SA.
Diversification Opportunities for BICO Group and Novacyt SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BICO and Novacyt is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Novacyt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt SA and BICO Group 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 BICO Group AB are associated (or correlated) with Novacyt SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt SA has no effect on the direction of BICO Group i.e., BICO Group and Novacyt SA go up and down completely randomly.
Pair Corralation between BICO Group and Novacyt SA
Assuming the 90 days horizon BICO Group is expected to generate 4.89 times less return on investment than Novacyt SA. But when comparing it to its historical volatility, BICO Group AB is 1.22 times less risky than Novacyt SA. It trades about 0.01 of its potential returns per unit of risk. Novacyt SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Novacyt SA on September 25, 2024 and sell it today you would lose (6.00) from holding Novacyt SA or give up 8.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BICO Group AB vs. Novacyt SA
Performance |
| Timeline |
| BICO Group AB |
| Novacyt SA |
BICO Group and Novacyt SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BICO Group and Novacyt SA
The main advantage of trading using opposite BICO Group and Novacyt SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICO Group position performs unexpectedly, Novacyt 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 Novacyt SA will offset losses from the drop in Novacyt SA's long position.| BICO Group vs. Armm Inc | BICO Group vs. Bone Biologics Corp | BICO Group vs. Aurora Spine | BICO Group vs. Tenon Medical |
| Novacyt SA vs. Armm Inc | Novacyt SA vs. Bone Biologics Corp | Novacyt SA vs. BICO Group AB | Novacyt SA vs. Aurora Spine |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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