Correlation Between BICO Group and ADDvise Group

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

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

Diversification Opportunities for BICO Group and ADDvise Group

0.46

Correlation Coefficient

BICO Group  ADDvise Group

Very weak diversification

The 3 months correlation between BICO and ADDvise is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and ADDvise Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDvise Group B and BICO Group 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 BICO Group AB are associated (or correlated) with ADDvise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDvise Group B has no effect on the direction of BICO Group i.e., BICO Group and ADDvise Group go up and down completely randomly.

Pair Corralation between BICO Group and ADDvise Group

Assuming the 90 days trading horizon BICO Group AB is expected to generate 1.28 times more return on investment than ADDvise Group. However, BICO Group is 1.28 times more volatile than ADDvise Group B. It trades about 0.0 of its potential returns per unit of risk. ADDvise Group B is currently generating about -0.26 per unit of risk. If you would invest  4,758  in BICO Group AB on February 17, 2024 and sell it today you would lose (370.00) from holding BICO Group AB or give up 7.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BICO Group AB  vs.  ADDvise Group B

BICO Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

ADDvise Group B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADDvise Group B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BICO Group and ADDvise Group

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

The idea behind BICO Group AB and ADDvise Group B 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.