Correlation Between Bio Works and Addtech AB

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

Diversification Opportunities for Bio Works and Addtech AB

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bio and Addtech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bio Works Technologies AB and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Bio Works 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 Bio Works Technologies AB are associated (or correlated) with Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Bio Works i.e., Bio Works and Addtech AB go up and down completely randomly.

Pair Corralation between Bio Works and Addtech AB

Assuming the 90 days trading horizon Bio Works Technologies AB is expected to generate 3.12 times more return on investment than Addtech AB. However, Bio Works is 3.12 times more volatile than Addtech AB. It trades about 0.09 of its potential returns per unit of risk. Addtech AB is currently generating about 0.01 per unit of risk. If you would invest  83.00  in Bio Works Technologies AB on August 28, 2024 and sell it today you would earn a total of  6.00  from holding Bio Works Technologies AB or generate 7.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bio Works Technologies AB  vs.  Addtech AB

 Performance 
       Timeline  
Bio Works Technologies 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Bio Works Technologies AB 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.
Addtech AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Addtech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Addtech AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bio Works and Addtech AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bio Works and Addtech AB

The main advantage of trading using opposite Bio Works and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Works position performs unexpectedly, Addtech 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 Addtech AB will offset losses from the drop in Addtech AB's long position.
The idea behind Bio Works Technologies AB and Addtech 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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