Correlation Between Lipum AB and Xvivo Perfusion

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

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

Diversification Opportunities for Lipum AB and Xvivo Perfusion

-0.67

Correlation Coefficient

Lipum AB  Xvivo Perfusion

Excellent diversification

The 3 months correlation between Lipum and Xvivo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Xvivo Perfusion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xvivo Perfusion AB and Lipum 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 Lipum AB are associated (or correlated) with Xvivo Perfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xvivo Perfusion AB has no effect on the direction of Lipum AB i.e., Lipum AB and Xvivo Perfusion go up and down completely randomly.

Pair Corralation between Lipum AB and Xvivo Perfusion

Assuming the 90 days trading horizon Lipum AB is expected to generate 1.59 times more return on investment than Xvivo Perfusion. However, Lipum AB is 1.59 times more volatile than Xvivo Perfusion AB. It trades about 0.17 of its potential returns per unit of risk. Xvivo Perfusion AB is currently generating about -0.06 per unit of risk. If you would invest  1,170  in Lipum AB on August 31, 2024 and sell it today you would earn a total of  450.00  from holding Lipum AB or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Lipum AB  vs.  Xvivo Perfusion AB

Lipum AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xvivo Perfusion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xvivo Perfusion 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 Lipum AB and Xvivo Perfusion

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

The idea behind Lipum AB and Xvivo Perfusion 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.