Correlation Between FormPipe Software and Bio Works
Can any of the company-specific risk be diversified away by investing in both FormPipe Software and Bio Works 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 FormPipe Software and Bio Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormPipe Software AB and Bio Works Technologies AB, you can compare the effects of market volatilities on FormPipe Software and Bio Works 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 FormPipe Software with a short position of Bio Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and Bio Works.
Diversification Opportunities for FormPipe Software and Bio Works
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FormPipe and Bio is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of FormPipe Software i.e., FormPipe Software and Bio Works go up and down completely randomly.
Pair Corralation between FormPipe Software and Bio Works
Assuming the 90 days trading horizon FormPipe Software AB is expected to generate 0.44 times more return on investment than Bio Works. However, FormPipe Software AB is 2.28 times less risky than Bio Works. It trades about 0.02 of its potential returns per unit of risk. Bio Works Technologies AB is currently generating about -0.09 per unit of risk. If you would invest 2,233 in FormPipe Software AB on August 24, 2024 and sell it today you would earn a total of 287.00 from holding FormPipe Software AB or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FormPipe Software AB vs. Bio Works Technologies AB
Performance |
| Timeline |
| FormPipe Software |
| Bio Works Technologies |
FormPipe Software and Bio Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormPipe Software and Bio Works
The main advantage of trading using opposite FormPipe Software and Bio Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormPipe Software position performs unexpectedly, Bio Works 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 Bio Works will offset losses from the drop in Bio Works' long position.| FormPipe Software vs. Enea AB | FormPipe Software vs. Novotek AB | FormPipe Software vs. Addnode Group AB | FormPipe Software vs. Softronic 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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