Correlation Between Lidds AB and Newbury Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Lidds AB and Newbury Pharmaceuticals 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 Lidds AB and Newbury Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lidds AB and Newbury Pharmaceuticals AB, you can compare the effects of market volatilities on Lidds AB and Newbury Pharmaceuticals 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 Lidds AB with a short position of Newbury Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lidds AB and Newbury Pharmaceuticals.
Diversification Opportunities for Lidds AB and Newbury Pharmaceuticals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lidds and Newbury is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lidds AB and Newbury Pharmaceuticals AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newbury Pharmaceuticals and Lidds AB 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 Lidds AB are associated (or correlated) with Newbury Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newbury Pharmaceuticals has no effect on the direction of Lidds AB i.e., Lidds AB and Newbury Pharmaceuticals go up and down completely randomly.
Pair Corralation between Lidds AB and Newbury Pharmaceuticals
Assuming the 90 days trading horizon Lidds AB is expected to generate 3.28 times more return on investment than Newbury Pharmaceuticals. However, Lidds AB is 3.28 times more volatile than Newbury Pharmaceuticals AB. It trades about 0.04 of its potential returns per unit of risk. Newbury Pharmaceuticals AB is currently generating about 0.01 per unit of risk. If you would invest 13.00 in Lidds AB on September 4, 2024 and sell it today you would lose (3.00) from holding Lidds AB or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lidds AB vs. Newbury Pharmaceuticals AB
Performance |
| Timeline |
| Lidds AB |
| Newbury Pharmaceuticals |
Lidds AB and Newbury Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lidds AB and Newbury Pharmaceuticals
The main advantage of trading using opposite Lidds AB and Newbury Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lidds AB position performs unexpectedly, Newbury Pharmaceuticals 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 Newbury Pharmaceuticals will offset losses from the drop in Newbury Pharmaceuticals' long position.| Lidds AB vs. BioInvent International AB | Lidds AB vs. Alligator Bioscience AB | Lidds AB vs. Swedish Orphan Biovitrum | Lidds AB vs. Anoto Group AB |
| Newbury Pharmaceuticals vs. Maven Wireless Sweden | Newbury Pharmaceuticals vs. SolTech Energy Sweden | Newbury Pharmaceuticals vs. Soder Sportfiske AB | Newbury Pharmaceuticals vs. FormPipe Software 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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