Correlation Between BioPorto and Genmab AS

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Can any of the company-specific risk be diversified away by investing in both BioPorto and Genmab 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 Genmab AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioPorto and Genmab AS, you can compare the effects of market volatilities on BioPorto and Genmab 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 Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioPorto and Genmab AS.

Diversification Opportunities for BioPorto and Genmab AS

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between BioPorto and Genmab is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab 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 Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of BioPorto i.e., BioPorto and Genmab AS go up and down completely randomly.

Pair Corralation between BioPorto and Genmab AS

Assuming the 90 days trading horizon BioPorto is expected to under-perform the Genmab AS. In addition to that, BioPorto is 1.25 times more volatile than Genmab AS. It trades about -0.49 of its total potential returns per unit of risk. Genmab AS is currently generating about -0.2 per unit of volatility. If you would invest  158,200  in Genmab AS on August 28, 2024 and sell it today you would lose (12,450) from holding Genmab AS or give up 7.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BioPorto  vs.  Genmab AS

 Performance 
       Timeline  
BioPorto 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days BioPorto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Genmab AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Genmab AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

BioPorto and Genmab AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BioPorto and Genmab AS

The main advantage of trading using opposite BioPorto and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioPorto position performs unexpectedly, Genmab 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 Genmab AS will offset losses from the drop in Genmab AS's long position.
The idea behind BioPorto and Genmab 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.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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