Correlation Between Investor and Diagonal Bio
Can any of the company-specific risk be diversified away by investing in both Investor and Diagonal Bio 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 Investor and Diagonal Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Diagonal Bio AB, you can compare the effects of market volatilities on Investor and Diagonal Bio 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 Investor with a short position of Diagonal Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Diagonal Bio.
Diversification Opportunities for Investor and Diagonal Bio
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investor and Diagonal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Diagonal Bio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagonal Bio AB and Investor 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 Investor AB ser are associated (or correlated) with Diagonal Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagonal Bio AB has no effect on the direction of Investor i.e., Investor and Diagonal Bio go up and down completely randomly.
Pair Corralation between Investor and Diagonal Bio
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.12 times more return on investment than Diagonal Bio. However, Investor AB ser is 8.42 times less risky than Diagonal Bio. It trades about -0.07 of its potential returns per unit of risk. Diagonal Bio AB is currently generating about -0.16 per unit of risk. If you would invest 30,081 in Investor AB ser on September 1, 2024 and sell it today you would lose (351.00) from holding Investor AB ser or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Investor AB ser vs. Diagonal Bio AB
Performance |
| Timeline |
| Investor AB ser |
| Diagonal Bio AB |
Investor and Diagonal Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Diagonal Bio
The main advantage of trading using opposite Investor and Diagonal Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Diagonal Bio 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 Diagonal Bio will offset losses from the drop in Diagonal Bio's long position.| Investor vs. Investor AB ser | Investor vs. Industrivarden AB ser | Investor vs. Investment AB Latour | Investor vs. Kinnevik Investment 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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