Correlation Between Biotage AB and GomSpace Group

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

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

Diversification Opportunities for Biotage AB and GomSpace Group

0.76

Correlation Coefficient

Biotage AB  GomSpace Group

Poor diversification

The 3 months correlation between Biotage and GomSpace is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Biotage AB and GomSpace Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GomSpace Group AB and Biotage 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 Biotage AB are associated (or correlated) with GomSpace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GomSpace Group AB has no effect on the direction of Biotage AB i.e., Biotage AB and GomSpace Group go up and down completely randomly.

Pair Corralation between Biotage AB and GomSpace Group

Assuming the 90 days trading horizon Biotage AB is expected to generate 4.89 times less return on investment than GomSpace Group. But when comparing it to its historical volatility, Biotage AB is 2.23 times less risky than GomSpace Group. It trades about 0.04 of its potential returns per unit of risk. GomSpace Group AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  124.00  in GomSpace Group AB on August 29, 2024 and sell it today you would earn a total of  333.00  from holding GomSpace Group AB or generate 268.55% return on investment over 90 days.

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

Biotage AB  vs.  GomSpace Group AB

Biotage AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biotage AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

GomSpace Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GomSpace Group 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 Biotage AB and GomSpace Group

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

The idea behind Biotage AB and GomSpace Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.