Correlation Between Anoto Group and Precise Biometrics

Can any of the company-specific risk be diversified away by investing in both Anoto Group and Precise Biometrics 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 Anoto Group and Precise Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anoto Group AB and Precise Biometrics AB, you can compare the effects of market volatilities on Anoto Group and Precise Biometrics 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 Anoto Group with a short position of Precise Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anoto Group and Precise Biometrics.

Diversification Opportunities for Anoto Group and Precise Biometrics

-0.43

Correlation Coefficient

Anoto Group  Precise Biometrics

Very good diversification

The 3 months correlation between Anoto and Precise is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Anoto Group AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics and Anoto Group 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 Anoto Group AB are associated (or correlated) with Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Anoto Group i.e., Anoto Group and Precise Biometrics go up and down completely randomly.

Pair Corralation between Anoto Group and Precise Biometrics

Assuming the 90 days trading horizon Anoto Group AB is expected to under-perform the Precise Biometrics. But the stock apears to be less risky and, when comparing its historical volatility, Anoto Group AB is 1.16 times less risky than Precise Biometrics. The stock trades about -0.08 of its potential returns per unit of risk. The Precise Biometrics AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Precise Biometrics AB on September 12, 2024 and sell it today you would earn a total of  214.00  from holding Precise Biometrics AB or generate 63.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anoto Group AB  vs.  Precise Biometrics AB

Anoto Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anoto Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Precise Biometrics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precise Biometrics AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Precise Biometrics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anoto Group and Precise Biometrics

The main advantage of trading using opposite Anoto Group and Precise Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anoto Group position performs unexpectedly, Precise Biometrics 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 Precise Biometrics will offset losses from the drop in Precise Biometrics' long position.

The idea behind Anoto Group AB and Precise Biometrics AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.