Correlation Between XSpray Pharma and AroCell AB

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

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

Diversification Opportunities for XSpray Pharma and AroCell AB

0.09

Correlation Coefficient

XSpray Pharma  AroCell AB

Significant diversification

The 3 months correlation between XSpray and AroCell is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding XSpray Pharma AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and XSpray Pharma 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 XSpray Pharma AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of XSpray Pharma i.e., XSpray Pharma and AroCell AB go up and down completely randomly.

Pair Corralation between XSpray Pharma and AroCell AB

Assuming the 90 days trading horizon XSpray Pharma AB is expected to generate 1.21 times more return on investment than AroCell AB. However, XSpray Pharma is 1.21 times more volatile than AroCell AB. It trades about 0.0 of its potential returns per unit of risk. AroCell AB is currently generating about -0.03 per unit of risk. If you would invest  6,660  in XSpray Pharma AB on February 17, 2024 and sell it today you would lose (1,480) from holding XSpray Pharma AB or give up 22.22% of portfolio value over 90 days.

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

XSpray Pharma AB  vs.  AroCell AB

XSpray Pharma AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XSpray Pharma AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, XSpray Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

AroCell AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XSpray Pharma and AroCell AB

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

The idea behind XSpray Pharma AB and AroCell 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 CEOs Directory module to screen CEOs from public companies around the world.