Correlation Between BICO Group and Demant AS
Can any of the company-specific risk be diversified away by investing in both BICO Group and Demant AS 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 Demant AS 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 Demant AS ADR, you can compare the effects of market volatilities on BICO Group and Demant AS 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 Demant AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BICO Group and Demant AS.
Diversification Opportunities for BICO Group and Demant AS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BICO and Demant is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Demant AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant AS ADR 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS ADR has no effect on the direction of BICO Group i.e., BICO Group and Demant AS go up and down completely randomly.
Pair Corralation between BICO Group and Demant AS
Assuming the 90 days horizon BICO Group AB is expected to under-perform the Demant AS. In addition to that, BICO Group is 1.54 times more volatile than Demant AS ADR. It trades about -0.03 of its total potential returns per unit of risk. Demant AS ADR is currently generating about 0.0 per unit of volatility. If you would invest 2,050 in Demant AS ADR on August 26, 2024 and sell it today you would lose (164.00) from holding Demant AS ADR or give up 8.0% 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. Demant AS ADR
Performance |
| Timeline |
| BICO Group AB |
| Demant AS ADR |
BICO Group and Demant AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BICO Group and Demant AS
The main advantage of trading using opposite BICO Group and Demant AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICO Group position performs unexpectedly, Demant AS 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 Demant AS will offset losses from the drop in Demant AS's long position.| BICO Group vs. Anteris Technologies | BICO Group vs. Brain Scientific | BICO Group vs. Aurora Spine | BICO Group vs. Tenon Medical |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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