Correlation Between Camurus AB and Swedish Orphan

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

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

Diversification Opportunities for Camurus AB and Swedish Orphan

0.27

Correlation Coefficient

Camurus AB  Swedish Orphan

Modest diversification

The 3 months correlation between Camurus and Swedish is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Camurus AB and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and Camurus 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 Camurus AB are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Camurus AB i.e., Camurus AB and Swedish Orphan go up and down completely randomly.

Pair Corralation between Camurus AB and Swedish Orphan

Assuming the 90 days trading horizon Camurus AB is expected to under-perform the Swedish Orphan. But the stock apears to be less risky and, when comparing its historical volatility, Camurus AB is 1.19 times less risky than Swedish Orphan. The stock trades about -0.17 of its potential returns per unit of risk. The Swedish Orphan Biovitrum is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  32,520  in Swedish Orphan Biovitrum on September 14, 2024 and sell it today you would lose (900.00) from holding Swedish Orphan Biovitrum or give up 2.77% of portfolio value over 90 days.

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

Camurus AB  vs.  Swedish Orphan Biovitrum

Camurus AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camurus AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Swedish Orphan Biovitrum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swedish Orphan Biovitrum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Swedish Orphan is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Camurus AB and Swedish Orphan

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

The idea behind Camurus AB and Swedish Orphan Biovitrum 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.