Correlation Between BioPorto and Cemat AS
Can any of the company-specific risk be diversified away by investing in both BioPorto and Cemat 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 BioPorto and Cemat AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioPorto and Cemat AS, you can compare the effects of market volatilities on BioPorto and Cemat 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 BioPorto with a short position of Cemat AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioPorto and Cemat AS.
Diversification Opportunities for BioPorto and Cemat AS
Very poor diversification
The 3 months correlation between BioPorto and Cemat is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS and BioPorto 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 BioPorto are associated (or correlated) with Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of BioPorto i.e., BioPorto and Cemat AS go up and down completely randomly.
Pair Corralation between BioPorto and Cemat AS
Assuming the 90 days trading horizon BioPorto is expected to generate 2.96 times more return on investment than Cemat AS. However, BioPorto is 2.96 times more volatile than Cemat AS. It trades about 0.14 of its potential returns per unit of risk. Cemat AS is currently generating about 0.01 per unit of risk. If you would invest 141.00 in BioPorto on October 26, 2024 and sell it today you would earn a total of 13.00 from holding BioPorto or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioPorto vs. Cemat AS
Performance |
| Timeline |
| BioPorto |
| Cemat AS |
BioPorto and Cemat AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioPorto and Cemat AS
The main advantage of trading using opposite BioPorto and Cemat AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioPorto position performs unexpectedly, Cemat 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 Cemat AS will offset losses from the drop in Cemat AS's long position.The idea behind BioPorto and Cemat AS 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.| Cemat AS vs. BioPorto | Cemat AS vs. Newcap Holding AS | Cemat AS vs. Agat Ejendomme AS | Cemat AS vs. PF Atlantic Petroleum |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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