Correlation Between Diamyd Medical and BioArctic
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and BioArctic 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 Diamyd Medical and BioArctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and BioArctic AB, you can compare the effects of market volatilities on Diamyd Medical and BioArctic 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 Diamyd Medical with a short position of BioArctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and BioArctic.
Diversification Opportunities for Diamyd Medical and BioArctic
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diamyd and BioArctic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and BioArctic go up and down completely randomly.
Pair Corralation between Diamyd Medical and BioArctic
Assuming the 90 days trading horizon Diamyd Medical AB is expected to under-perform the BioArctic. But the stock apears to be less risky and, when comparing its historical volatility, Diamyd Medical AB is 2.37 times less risky than BioArctic. The stock trades about -0.03 of its potential returns per unit of risk. The BioArctic AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 15,820 in BioArctic AB on August 29, 2024 and sell it today you would earn a total of 3,620 from holding BioArctic AB or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. BioArctic AB
Performance |
| Timeline |
| Diamyd Medical AB |
| BioArctic AB |
Diamyd Medical and BioArctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and BioArctic
The main advantage of trading using opposite Diamyd Medical and BioArctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, BioArctic 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 BioArctic will offset losses from the drop in BioArctic's long position.| Diamyd Medical vs. Hansa Biopharma AB | Diamyd Medical vs. Xbrane Biopharma AB | Diamyd Medical vs. BioArctic AB | Diamyd Medical vs. Cantargia AB |
| BioArctic vs. Oncopeptides AB | BioArctic vs. Camurus AB | BioArctic vs. Hansa Biopharma AB | BioArctic vs. Cantargia 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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