Correlation Between BioArctic and CellaVision
Can any of the company-specific risk be diversified away by investing in both BioArctic and CellaVision 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 BioArctic and CellaVision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioArctic AB and CellaVision AB, you can compare the effects of market volatilities on BioArctic and CellaVision 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 BioArctic with a short position of CellaVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioArctic and CellaVision.
Diversification Opportunities for BioArctic and CellaVision
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between BioArctic and CellaVision is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and CellaVision AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CellaVision AB and BioArctic 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 BioArctic AB are associated (or correlated) with CellaVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CellaVision AB has no effect on the direction of BioArctic i.e., BioArctic and CellaVision go up and down completely randomly.
Pair Corralation between BioArctic and CellaVision
Assuming the 90 days trading horizon BioArctic AB is expected to under-perform the CellaVision. In addition to that, BioArctic is 1.23 times more volatile than CellaVision AB. It trades about -0.01 of its total potential returns per unit of risk. CellaVision AB is currently generating about 0.03 per unit of volatility. If you would invest 17,116 in CellaVision AB on August 26, 2024 and sell it today you would earn a total of 4,584 from holding CellaVision AB or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioArctic AB vs. CellaVision AB
Performance |
| Timeline |
| BioArctic AB |
| CellaVision AB |
BioArctic and CellaVision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioArctic and CellaVision
The main advantage of trading using opposite BioArctic and CellaVision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioArctic position performs unexpectedly, CellaVision 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 CellaVision will offset losses from the drop in CellaVision's long position.The idea behind BioArctic AB and CellaVision 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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