Correlation Between Camurus AB and Hansa Biopharma

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

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

Diversification Opportunities for Camurus AB and Hansa Biopharma

0.36

Correlation Coefficient

Camurus AB  Hansa Biopharma

Weak diversification

The 3 months correlation between Camurus and Hansa is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Camurus AB and Hansa Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Biopharma AB and Camurus 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 Camurus AB are associated (or correlated) with Hansa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Biopharma AB has no effect on the direction of Camurus AB i.e., Camurus AB and Hansa Biopharma go up and down completely randomly.

Pair Corralation between Camurus AB and Hansa Biopharma

Assuming the 90 days trading horizon Camurus AB is expected to generate 1.69 times less return on investment than Hansa Biopharma. But when comparing it to its historical volatility, Camurus AB is 1.53 times less risky than Hansa Biopharma. It trades about 0.42 of its potential returns per unit of risk. Hansa Biopharma AB is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  2,814  in Hansa Biopharma AB on February 21, 2024 and sell it today you would earn a total of  1,052  from holding Hansa Biopharma AB or generate 37.38% return on investment over 90 days.

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

Camurus AB  vs.  Hansa Biopharma AB

Camurus AB

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Camurus AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Camurus AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hansa Biopharma AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hansa Biopharma AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Hansa Biopharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Camurus AB and Hansa Biopharma

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

The idea behind Camurus AB and Hansa Biopharma 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.