Correlation Between Karolinska Development and BioInvent International
Can any of the company-specific risk be diversified away by investing in both Karolinska Development and BioInvent International 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 Karolinska Development and BioInvent International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karolinska Development AB and BioInvent International AB, you can compare the effects of market volatilities on Karolinska Development and BioInvent International 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 Karolinska Development with a short position of BioInvent International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karolinska Development and BioInvent International.
Diversification Opportunities for Karolinska Development and BioInvent International
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Karolinska and BioInvent is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Karolinska Development AB and BioInvent International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioInvent International and Karolinska Development 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 Karolinska Development AB are associated (or correlated) with BioInvent International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioInvent International has no effect on the direction of Karolinska Development i.e., Karolinska Development and BioInvent International go up and down completely randomly.
Pair Corralation between Karolinska Development and BioInvent International
Assuming the 90 days trading horizon Karolinska Development AB is expected to under-perform the BioInvent International. In addition to that, Karolinska Development is 1.3 times more volatile than BioInvent International AB. It trades about -0.12 of its total potential returns per unit of risk. BioInvent International AB is currently generating about 0.05 per unit of volatility. If you would invest 4,335 in BioInvent International AB on August 25, 2024 and sell it today you would earn a total of 120.00 from holding BioInvent International AB or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karolinska Development AB vs. BioInvent International AB
Performance |
| Timeline |
| Karolinska Development |
| BioInvent International |
Karolinska Development and BioInvent International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karolinska Development and BioInvent International
The main advantage of trading using opposite Karolinska Development and BioInvent International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karolinska Development position performs unexpectedly, BioInvent International 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 BioInvent International will offset losses from the drop in BioInvent International's long position.The idea behind Karolinska Development AB and BioInvent International 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.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |