Correlation Between Orexo AB and Lidds AB
Can any of the company-specific risk be diversified away by investing in both Orexo AB and Lidds AB 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 Lidds AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orexo AB and Lidds AB, you can compare the effects of market volatilities on Orexo AB and Lidds AB 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 Lidds AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orexo AB and Lidds AB.
Diversification Opportunities for Orexo AB and Lidds AB
Good diversification
The 3 months correlation between Orexo and Lidds is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Orexo AB and Lidds AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lidds 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 Lidds AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lidds AB has no effect on the direction of Orexo AB i.e., Orexo AB and Lidds AB go up and down completely randomly.
Pair Corralation between Orexo AB and Lidds AB
Assuming the 90 days trading horizon Orexo AB is expected to generate 0.46 times more return on investment than Lidds AB. However, Orexo AB is 2.17 times less risky than Lidds AB. It trades about -0.01 of its potential returns per unit of risk. Lidds AB is currently generating about -0.02 per unit of risk. If you would invest 1,866 in Orexo AB on August 25, 2024 and sell it today you would lose (911.00) from holding Orexo AB or give up 48.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orexo AB vs. Lidds AB
Performance |
| Timeline |
| Orexo AB |
| Lidds AB |
Orexo AB and Lidds AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orexo AB and Lidds AB
The main advantage of trading using opposite Orexo AB and Lidds AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orexo AB position performs unexpectedly, Lidds AB 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 Lidds AB will offset losses from the drop in Lidds AB'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 |
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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