Correlation Between Telia Company and BioArctic

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

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

Diversification Opportunities for Telia Company and BioArctic

0.03

Correlation Coefficient

Telia Company  BioArctic

Significant diversification

The 3 months correlation between Telia and BioArctic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB and Telia Company 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 Telia Company AB are associated (or correlated) with BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of Telia Company i.e., Telia Company and BioArctic go up and down completely randomly.

Pair Corralation between Telia Company and BioArctic

Assuming the 90 days trading horizon Telia Company is expected to generate 3.22 times less return on investment than BioArctic. But when comparing it to its historical volatility, Telia Company AB is 5.43 times less risky than BioArctic. It trades about 0.33 of its potential returns per unit of risk. BioArctic AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  20,300  in BioArctic AB on March 11, 2024 and sell it today you would earn a total of  3,460  from holding BioArctic AB or generate 17.04% return on investment over 90 days.

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

Telia Company AB  vs.  BioArctic AB

Telia Company

Risk-Adjusted Performance

13 of 100

Good

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

BioArctic AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BioArctic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telia Company and BioArctic

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

The idea behind Telia Company AB and BioArctic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.