Correlation Between Swedish Orphan and Active Biotech
Can any of the company-specific risk be diversified away by investing in both Swedish Orphan 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 Swedish Orphan and Active Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedish Orphan Biovitrum and Active Biotech AB, you can compare the effects of market volatilities on Swedish Orphan 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 Swedish Orphan with a short position of Active Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedish Orphan and Active Biotech.
Diversification Opportunities for Swedish Orphan and Active Biotech
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Swedish and Active is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum 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 Swedish Orphan 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 Swedish Orphan Biovitrum 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 Swedish Orphan i.e., Swedish Orphan and Active Biotech go up and down completely randomly.
Pair Corralation between Swedish Orphan and Active Biotech
Assuming the 90 days trading horizon Swedish Orphan Biovitrum is expected to under-perform the Active Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Swedish Orphan Biovitrum is 7.73 times less risky than Active Biotech. The stock trades about -0.14 of its potential returns per unit of risk. The 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 Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Swedish Orphan Biovitrum vs. Active Biotech AB
Performance |
| Timeline |
| Swedish Orphan Biovitrum |
| Active Biotech AB |
Swedish Orphan and Active Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedish Orphan and Active Biotech
The main advantage of trading using opposite Swedish Orphan and Active Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedish Orphan 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.| Swedish Orphan vs. Kancera AB | Swedish Orphan vs. Cyxone AB | Swedish Orphan vs. Lidds AB | Swedish Orphan vs. Cantargia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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