Correlation Between Industrivarden and BioArctic
Can any of the company-specific risk be diversified away by investing in both Industrivarden 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 Industrivarden and BioArctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and BioArctic AB, you can compare the effects of market volatilities on Industrivarden 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 Industrivarden with a short position of BioArctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and BioArctic.
Diversification Opportunities for Industrivarden and BioArctic
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrivarden and BioArctic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and Industrivarden 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 Industrivarden AB ser 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 Industrivarden i.e., Industrivarden and BioArctic go up and down completely randomly.
Pair Corralation between Industrivarden and BioArctic
Assuming the 90 days trading horizon Industrivarden AB ser is expected to under-perform the BioArctic. But the stock apears to be less risky and, when comparing its historical volatility, Industrivarden AB ser is 5.7 times less risky than BioArctic. The stock trades about -0.1 of its potential returns per unit of risk. The BioArctic AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,850 in BioArctic AB on August 30, 2024 and sell it today you would earn a total of 2,900 from holding BioArctic AB or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. BioArctic AB
Performance |
| Timeline |
| Industrivarden AB ser |
| BioArctic AB |
Industrivarden and BioArctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and BioArctic
The main advantage of trading using opposite Industrivarden and BioArctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden 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.| Industrivarden vs. Investor AB ser | Industrivarden vs. Investment AB Latour | Industrivarden vs. Tele2 AB | Industrivarden vs. Boliden 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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