Correlation Between BII Railway and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both BII Railway and Diamyd Medical 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 BII Railway and Diamyd Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Diamyd Medical AB, you can compare the effects of market volatilities on BII Railway and Diamyd Medical 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 BII Railway with a short position of Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Diamyd Medical.
Diversification Opportunities for BII Railway and Diamyd Medical
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BII and Diamyd is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB and BII Railway 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 BII Railway Transportation are associated (or correlated) with Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of BII Railway i.e., BII Railway and Diamyd Medical go up and down completely randomly.
Pair Corralation between BII Railway and Diamyd Medical
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the Diamyd Medical. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.58 times less risky than Diamyd Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Diamyd Medical AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 98.00 in Diamyd Medical AB on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Diamyd Medical AB or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Diamyd Medical AB
Performance |
| Timeline |
| BII Railway Transpor |
| Diamyd Medical AB |
BII Railway and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Diamyd Medical
The main advantage of trading using opposite BII Railway and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.| BII Railway vs. Accenture plc | BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. NMI Holdings |
| Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. NMI Holdings | Diamyd Medical vs. Origin Agritech | Diamyd Medical vs. SIVERS SEMICONDUCTORS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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