Correlation Between Orexo AB and Karolinska Development
Can any of the company-specific risk be diversified away by investing in both Orexo AB and Karolinska Development 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 Karolinska Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orexo AB and Karolinska Development AB, you can compare the effects of market volatilities on Orexo AB and Karolinska Development 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 Karolinska Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orexo AB and Karolinska Development.
Diversification Opportunities for Orexo AB and Karolinska Development
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orexo and Karolinska is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Orexo AB and Karolinska Development AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karolinska Development 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 Karolinska Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karolinska Development has no effect on the direction of Orexo AB i.e., Orexo AB and Karolinska Development go up and down completely randomly.
Pair Corralation between Orexo AB and Karolinska Development
Assuming the 90 days trading horizon Orexo AB is expected to generate 1.17 times more return on investment than Karolinska Development. However, Orexo AB is 1.17 times more volatile than Karolinska Development AB. It trades about 0.13 of its potential returns per unit of risk. Karolinska Development AB is currently generating about -0.14 per unit of risk. If you would invest 1,100 in Orexo AB on August 29, 2024 and sell it today you would earn a total of 128.00 from holding Orexo AB or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orexo AB vs. Karolinska Development AB
Performance |
| Timeline |
| Orexo AB |
| Karolinska Development |
Orexo AB and Karolinska Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orexo AB and Karolinska Development
The main advantage of trading using opposite Orexo AB and Karolinska Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orexo AB position performs unexpectedly, Karolinska Development 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 Karolinska Development will offset losses from the drop in Karolinska Development'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 |
| Karolinska Development vs. Oncopeptides AB | Karolinska Development vs. Cantargia AB | Karolinska Development vs. BioInvent International AB | Karolinska Development vs. Moberg Pharma 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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