Correlation Between Orexo AB and Active Biotech
Can any of the company-specific risk be diversified away by investing in both Orexo AB 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 Orexo AB and Active Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orexo AB and Active Biotech AB, you can compare the effects of market volatilities on Orexo AB 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 Orexo AB with a short position of Active Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orexo AB and Active Biotech.
Diversification Opportunities for Orexo AB and Active Biotech
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orexo and Active is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Orexo 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 Orexo 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 Orexo 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 Orexo AB i.e., Orexo AB and Active Biotech go up and down completely randomly.
Pair Corralation between Orexo AB and Active Biotech
Assuming the 90 days trading horizon Orexo AB is expected to generate 3.53 times less return on investment than Active Biotech. But when comparing it to its historical volatility, Orexo AB is 4.36 times less risky than Active Biotech. It trades about 0.19 of its potential returns per unit of risk. 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 | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orexo AB vs. Active Biotech AB
Performance |
| Timeline |
| Orexo AB |
| Active Biotech AB |
Orexo AB and Active Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orexo AB and Active Biotech
The main advantage of trading using opposite Orexo AB and Active Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orexo AB 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.| Orexo AB vs. Swedish Orphan Biovitrum | Orexo AB vs. BioInvent International AB | Orexo AB vs. Camurus AB | Orexo AB vs. BioArctic AB |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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