Correlation Between BioArctic and Bonesupport Holding

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

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

Diversification Opportunities for BioArctic and Bonesupport Holding

0.12

Correlation Coefficient

BioArctic  Bonesupport Holding

Average diversification

The 3 months correlation between BioArctic and Bonesupport is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Bonesupport Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonesupport Holding and BioArctic 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 BioArctic AB are associated (or correlated) with Bonesupport Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonesupport Holding has no effect on the direction of BioArctic i.e., BioArctic and Bonesupport Holding go up and down completely randomly.

Pair Corralation between BioArctic and Bonesupport Holding

Assuming the 90 days trading horizon BioArctic AB is expected to generate 1.71 times more return on investment than Bonesupport Holding. However, BioArctic is 1.71 times more volatile than Bonesupport Holding AB. It trades about 0.07 of its potential returns per unit of risk. Bonesupport Holding AB is currently generating about 0.13 per unit of risk. If you would invest  16,410  in BioArctic AB on August 31, 2024 and sell it today you would earn a total of  2,900  from holding BioArctic AB or generate 17.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioArctic AB  vs.  Bonesupport Holding AB

BioArctic AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BioArctic sustained solid returns over the last few months and may actually be approaching a breakup point.

Bonesupport Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bonesupport Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioArctic and Bonesupport Holding

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

The idea behind BioArctic AB and Bonesupport Holding 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.