Correlation Between Hansa Biopharma and Probi AB

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

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

Diversification Opportunities for Hansa Biopharma and Probi AB

-0.48

Correlation Coefficient

Hansa Biopharma  Probi AB

Very good diversification

The 3 months correlation between Hansa and Probi is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Biopharma AB and Probi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Probi AB and Hansa Biopharma 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 Hansa Biopharma AB are associated (or correlated) with Probi AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Probi AB has no effect on the direction of Hansa Biopharma i.e., Hansa Biopharma and Probi AB go up and down completely randomly.

Pair Corralation between Hansa Biopharma and Probi AB

Assuming the 90 days trading horizon Hansa Biopharma AB is expected to under-perform the Probi AB. But the stock apears to be less risky and, when comparing its historical volatility, Hansa Biopharma AB is 1.78 times less risky than Probi AB. The stock trades about -0.2 of its potential returns per unit of risk. The Probi AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  27,600  in Probi AB on September 2, 2024 and sell it today you would earn a total of  7,100  from holding Probi AB or generate 25.72% return on investment over 90 days.

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

Hansa Biopharma AB  vs.  Probi AB

Hansa Biopharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansa Biopharma 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.

Probi AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Probi AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Probi AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hansa Biopharma and Probi AB

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

The idea behind Hansa Biopharma AB and Probi 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.