Correlation Between Swedish Orphan and Camurus AB

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

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

Diversification Opportunities for Swedish Orphan and Camurus AB

0.16

Correlation Coefficient

Swedish Orphan  Camurus AB

Average diversification

The 3 months correlation between Swedish and Camurus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum and Camurus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camurus AB and Swedish Orphan 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 Swedish Orphan Biovitrum are associated (or correlated) with Camurus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camurus AB has no effect on the direction of Swedish Orphan i.e., Swedish Orphan and Camurus AB go up and down completely randomly.

Pair Corralation between Swedish Orphan and Camurus AB

Assuming the 90 days trading horizon Swedish Orphan Biovitrum is expected to generate 0.83 times more return on investment than Camurus AB. However, Swedish Orphan Biovitrum is 1.21 times less risky than Camurus AB. It trades about -0.02 of its potential returns per unit of risk. Camurus AB is currently generating about -0.14 per unit of risk. If you would invest  32,000  in Swedish Orphan Biovitrum on August 30, 2024 and sell it today you would lose (1,220) from holding Swedish Orphan Biovitrum or give up 3.81% of portfolio value over 90 days.

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

Swedish Orphan Biovitrum  vs.  Camurus AB

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.

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Swedish Orphan and Camurus AB

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

The idea behind Swedish Orphan Biovitrum and Camurus 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.