Correlation Between Bio Works and Swedbank
Can any of the company-specific risk be diversified away by investing in both Bio Works and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Bio Works and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Works and Swedbank.
Diversification Opportunities for Bio Works and Swedbank
Weak diversification
The 3 months correlation between Bio and Swedbank is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bio Works Technologies AB and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Bio Works i.e., Bio Works and Swedbank go up and down completely randomly.
Pair Corralation between Bio Works and Swedbank
Assuming the 90 days trading horizon Bio Works Technologies AB is expected to generate 4.64 times more return on investment than Swedbank. However, Bio Works is 4.64 times more volatile than Swedbank AB. It trades about 0.03 of its potential returns per unit of risk. Swedbank AB is currently generating about -0.17 per unit of risk. If you would invest 83.00 in Bio Works Technologies AB on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Bio Works Technologies AB or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Works Technologies AB vs. Swedbank AB
Performance |
| Timeline |
| Bio Works Technologies |
| Swedbank AB |
Bio Works and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Works and Swedbank
The main advantage of trading using opposite Bio Works and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Works position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.The idea behind Bio Works Technologies AB and Swedbank 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.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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