Correlation Between BioPorto and North Media
Can any of the company-specific risk be diversified away by investing in both BioPorto and North Media 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 North Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioPorto and North Media AS, you can compare the effects of market volatilities on BioPorto and North Media 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 North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioPorto and North Media.
Diversification Opportunities for BioPorto and North Media
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BioPorto and North is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media 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 North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of BioPorto i.e., BioPorto and North Media go up and down completely randomly.
Pair Corralation between BioPorto and North Media
Assuming the 90 days trading horizon BioPorto is expected to generate 2.16 times more return on investment than North Media. However, BioPorto is 2.16 times more volatile than North Media AS. It trades about 0.01 of its potential returns per unit of risk. North Media AS is currently generating about -0.04 per unit of risk. If you would invest 167.00 in BioPorto on August 29, 2024 and sell it today you would lose (5.00) from holding BioPorto or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioPorto vs. North Media AS
Performance |
| Timeline |
| BioPorto |
| North Media AS |
BioPorto and North Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioPorto and North Media
The main advantage of trading using opposite BioPorto and North Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioPorto position performs unexpectedly, North Media 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 North Media will offset losses from the drop in North Media's long position.The idea behind BioPorto and North Media 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.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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