Correlation Between Fram Skandinavien and BioGaia AB
Can any of the company-specific risk be diversified away by investing in both Fram Skandinavien 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 Fram Skandinavien and BioGaia AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fram Skandinavien AB and BioGaia AB, you can compare the effects of market volatilities on Fram Skandinavien 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 Fram Skandinavien with a short position of BioGaia AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fram Skandinavien and BioGaia AB.
Diversification Opportunities for Fram Skandinavien and BioGaia AB
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fram and BioGaia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fram Skandinavien AB and BioGaia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioGaia AB and Fram Skandinavien 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 Fram Skandinavien 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 Fram Skandinavien i.e., Fram Skandinavien and BioGaia AB go up and down completely randomly.
Pair Corralation between Fram Skandinavien and BioGaia AB
Assuming the 90 days trading horizon Fram Skandinavien AB is expected to under-perform the BioGaia AB. In addition to that, Fram Skandinavien is 1.43 times more volatile than BioGaia AB. It trades about -0.19 of its total potential returns per unit of risk. BioGaia AB is currently generating about 0.02 per unit of volatility. If you would invest 9,971 in BioGaia AB on August 25, 2024 and sell it today you would earn a total of 609.00 from holding BioGaia AB or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fram Skandinavien AB vs. BioGaia AB
Performance |
| Timeline |
| Fram Skandinavien |
| BioGaia AB |
Fram Skandinavien and BioGaia AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fram Skandinavien and BioGaia AB
The main advantage of trading using opposite Fram Skandinavien and BioGaia AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fram Skandinavien 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.| Fram Skandinavien vs. Greater Than AB | Fram Skandinavien vs. Diadrom Holding AB | Fram Skandinavien vs. Corline Biomedical AB | Fram Skandinavien vs. BIMobject 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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