Correlation Between Hansa Biopharma and Active Biotech
Can any of the company-specific risk be diversified away by investing in both Hansa Biopharma and Active Biotech 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 Hansa Biopharma and Active Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Biopharma AB and Active Biotech AB, you can compare the effects of market volatilities on Hansa Biopharma and Active Biotech 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 Hansa Biopharma with a short position of Active Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Biopharma and Active Biotech.
Diversification Opportunities for Hansa Biopharma and Active Biotech
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hansa and Active is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Biopharma AB and Active Biotech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active Biotech AB and Hansa Biopharma 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 Hansa Biopharma AB are associated (or correlated) with Active Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active Biotech AB has no effect on the direction of Hansa Biopharma i.e., Hansa Biopharma and Active Biotech go up and down completely randomly.
Pair Corralation between Hansa Biopharma and Active Biotech
Assuming the 90 days trading horizon Hansa Biopharma AB is expected to under-perform the Active Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Hansa Biopharma AB is 5.86 times less risky than Active Biotech. The stock trades about -0.13 of its potential returns per unit of risk. The Active Biotech AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Active Biotech AB on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Active Biotech AB or generate 42.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansa Biopharma AB vs. Active Biotech AB
Performance |
| Timeline |
| Hansa Biopharma AB |
| Active Biotech AB |
Hansa Biopharma and Active Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansa Biopharma and Active Biotech
The main advantage of trading using opposite Hansa Biopharma and Active Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Biopharma position performs unexpectedly, Active Biotech 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 Active Biotech will offset losses from the drop in Active Biotech's long position.The idea behind Hansa Biopharma AB and Active Biotech AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Active Biotech vs. Cantargia AB | Active Biotech vs. BioArctic AB | Active Biotech vs. Oncopeptides AB | Active Biotech vs. Hansa Biopharma 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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