Correlation Between BioArctic and I Tech
Can any of the company-specific risk be diversified away by investing in both BioArctic and I Tech 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 I Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioArctic AB and I Tech, you can compare the effects of market volatilities on BioArctic and I Tech 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 I Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioArctic and I Tech.
Diversification Opportunities for BioArctic and I Tech
Good diversification
The 3 months correlation between BioArctic and ITECH is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and I Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Tech 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 I Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Tech has no effect on the direction of BioArctic i.e., BioArctic and I Tech go up and down completely randomly.
Pair Corralation between BioArctic and I Tech
Assuming the 90 days trading horizon BioArctic AB is expected to generate 2.88 times more return on investment than I Tech. However, BioArctic is 2.88 times more volatile than I Tech. It trades about 0.2 of its potential returns per unit of risk. I Tech is currently generating about 0.11 per unit of risk. If you would invest 14,690 in BioArctic AB on September 1, 2024 and sell it today you would earn a total of 4,620 from holding BioArctic AB or generate 31.45% 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. I Tech
Performance |
| Timeline |
| BioArctic AB |
| I Tech |
BioArctic and I Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioArctic and I Tech
The main advantage of trading using opposite BioArctic and I Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioArctic position performs unexpectedly, I Tech 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 I Tech will offset losses from the drop in I Tech's long position.| BioArctic vs. Oncopeptides AB | BioArctic vs. Camurus AB | BioArctic vs. Hansa Biopharma AB | BioArctic vs. Cantargia AB |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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