Correlation Between Bio Works and Smart Eye
Can any of the company-specific risk be diversified away by investing in both Bio Works and Smart Eye 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 Smart Eye 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 Smart Eye AB, you can compare the effects of market volatilities on Bio Works and Smart Eye 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 Smart Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Works and Smart Eye.
Diversification Opportunities for Bio Works and Smart Eye
Very poor diversification
The 3 months correlation between Bio and Smart is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bio Works Technologies AB and Smart Eye AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Eye 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 Smart Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Eye AB has no effect on the direction of Bio Works i.e., Bio Works and Smart Eye go up and down completely randomly.
Pair Corralation between Bio Works and Smart Eye
Assuming the 90 days trading horizon Bio Works Technologies AB is expected to generate 1.43 times more return on investment than Smart Eye. However, Bio Works is 1.43 times more volatile than Smart Eye AB. It trades about 0.06 of its potential returns per unit of risk. Smart Eye AB is currently generating about 0.04 per unit of risk. If you would invest 85.00 in Bio Works Technologies AB on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Bio Works Technologies AB or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Works Technologies AB vs. Smart Eye AB
Performance |
| Timeline |
| Bio Works Technologies |
| Smart Eye AB |
Bio Works and Smart Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Works and Smart Eye
The main advantage of trading using opposite Bio Works and Smart Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Works position performs unexpectedly, Smart Eye 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 Smart Eye will offset losses from the drop in Smart Eye's long position.| Bio Works vs. Simris Alg AB | Bio Works vs. Immunovia publ AB | Bio Works vs. Sedana Medical AB | Bio Works vs. KABE Group AB |
| Smart Eye vs. Lime Technologies AB | Smart Eye vs. FormPipe Software AB | Smart Eye vs. Surgical Science Sweden | Smart Eye vs. Vitec Software Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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