Correlation Between EQT AB and BioGaia AB
Can any of the company-specific risk be diversified away by investing in both EQT AB and BioGaia 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 EQT AB and BioGaia AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and BioGaia AB, you can compare the effects of market volatilities on EQT AB and BioGaia 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 EQT AB with a short position of BioGaia AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and BioGaia AB.
Diversification Opportunities for EQT AB and BioGaia AB
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EQT and BioGaia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and BioGaia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioGaia AB and EQT AB 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 EQT AB are associated (or correlated) with BioGaia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioGaia AB has no effect on the direction of EQT AB i.e., EQT AB and BioGaia AB go up and down completely randomly.
Pair Corralation between EQT AB and BioGaia AB
Assuming the 90 days trading horizon EQT AB is expected to generate 0.98 times more return on investment than BioGaia AB. However, EQT AB is 1.02 times less risky than BioGaia AB. It trades about 0.03 of its potential returns per unit of risk. BioGaia AB is currently generating about 0.02 per unit of risk. If you would invest 28,350 in EQT AB on August 25, 2024 and sell it today you would earn a total of 2,360 from holding EQT AB or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT AB vs. BioGaia AB
Performance |
| Timeline |
| EQT AB |
| BioGaia AB |
EQT AB and BioGaia AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT AB and BioGaia AB
The main advantage of trading using opposite EQT AB and BioGaia AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, BioGaia 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 BioGaia AB will offset losses from the drop in BioGaia AB's long position.| EQT AB vs. Investor AB ser | EQT AB vs. Kinnevik Investment AB | EQT AB vs. Samhllsbyggnadsbolaget i Norden | EQT AB vs. Investment AB Latour |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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