Correlation Between Biotage AB and Elekta AB
Can any of the company-specific risk be diversified away by investing in both Biotage AB and Elekta AB 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 Biotage AB and Elekta AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotage AB and Elekta AB, you can compare the effects of market volatilities on Biotage AB and Elekta AB 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 Biotage AB with a short position of Elekta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotage AB and Elekta AB.
Diversification Opportunities for Biotage AB and Elekta AB
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biotage and Elekta is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Biotage AB and Elekta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elekta AB and Biotage AB 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 Biotage AB are associated (or correlated) with Elekta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elekta AB has no effect on the direction of Biotage AB i.e., Biotage AB and Elekta AB go up and down completely randomly.
Pair Corralation between Biotage AB and Elekta AB
Assuming the 90 days trading horizon Biotage AB is expected to generate 1.4 times more return on investment than Elekta AB. However, Biotage AB is 1.4 times more volatile than Elekta AB. It trades about 0.02 of its potential returns per unit of risk. Elekta AB is currently generating about -0.03 per unit of risk. If you would invest 15,052 in Biotage AB on August 26, 2024 and sell it today you would earn a total of 448.00 from holding Biotage AB or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biotage AB vs. Elekta AB
Performance |
| Timeline |
| Biotage AB |
| Elekta AB |
Biotage AB and Elekta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotage AB and Elekta AB
The main advantage of trading using opposite Biotage AB and Elekta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotage AB position performs unexpectedly, Elekta AB 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 Elekta AB will offset losses from the drop in Elekta AB's long position.The idea behind Biotage AB and Elekta 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.| Elekta AB vs. Addtech AB | Elekta AB vs. Lifco AB | Elekta AB vs. Indutrade AB | Elekta AB vs. Lagercrantz Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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