Correlation Between Bio Works and Peab AB
Can any of the company-specific risk be diversified away by investing in both Bio Works and Peab 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 Peab 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 Peab AB, you can compare the effects of market volatilities on Bio Works and Peab 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 Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Works and Peab AB.
Diversification Opportunities for Bio Works and Peab AB
Very good diversification
The 3 months correlation between Bio and Peab is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bio Works Technologies AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Bio Works i.e., Bio Works and Peab AB go up and down completely randomly.
Pair Corralation between Bio Works and Peab AB
Assuming the 90 days trading horizon Bio Works Technologies AB is expected to under-perform the Peab AB. In addition to that, Bio Works is 2.16 times more volatile than Peab AB. It trades about -0.02 of its total potential returns per unit of risk. Peab AB is currently generating about -0.01 per unit of volatility. If you would invest 8,140 in Peab AB on August 30, 2024 and sell it today you would lose (110.00) from holding Peab AB or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Bio Works Technologies AB vs. Peab AB
Performance |
| Timeline |
| Bio Works Technologies |
| Peab AB |
Bio Works and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Works and Peab AB
The main advantage of trading using opposite Bio Works and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Works position performs unexpectedly, Peab 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 Peab AB will offset losses from the drop in Peab AB's long position.The idea behind Bio Works Technologies AB and Peab 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.| Peab AB vs. Bio Works Technologies AB | Peab AB vs. Episurf Medical AB | Peab AB vs. OptiCept Technologies AB | Peab AB vs. SolTech Energy Sweden |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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