Correlation Between BioArctic and Enorama Pharma

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

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

Diversification Opportunities for BioArctic and Enorama Pharma

-0.03

Correlation Coefficient

BioArctic  Enorama Pharma

Good diversification

The 3 months correlation between BioArctic and Enorama is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BioArctic AB and Enorama Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enorama Pharma AB 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 Enorama Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enorama Pharma AB has no effect on the direction of BioArctic i.e., BioArctic and Enorama Pharma go up and down completely randomly.

Pair Corralation between BioArctic and Enorama Pharma

Assuming the 90 days trading horizon BioArctic AB is expected to generate 1.2 times more return on investment than Enorama Pharma. However, BioArctic is 1.2 times more volatile than Enorama Pharma AB. It trades about 0.11 of its potential returns per unit of risk. Enorama Pharma AB is currently generating about -0.12 per unit of risk. If you would invest  15,770  in BioArctic AB on September 4, 2024 and sell it today you would earn a total of  3,600  from holding BioArctic AB or generate 22.83% return on investment over 90 days.

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

BioArctic AB  vs.  Enorama Pharma 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.

Enorama Pharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enorama Pharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BioArctic and Enorama Pharma

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

The idea behind BioArctic AB and Enorama Pharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.