Correlation Between Charles River and Olink Holding

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

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

Diversification Opportunities for Charles River and Olink Holding

-0.26

Correlation Coefficient

Charles River  Olink Holding

Very good diversification

The 3 months correlation between Charles and Olink is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Charles River Laboratories and Olink Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olink Holding AB and Charles River 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 Charles River Laboratories are associated (or correlated) with Olink Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olink Holding AB has no effect on the direction of Charles River i.e., Charles River and Olink Holding go up and down completely randomly.

Pair Corralation between Charles River and Olink Holding

Considering the 90-day investment horizon Charles River Laboratories is expected to under-perform the Olink Holding. In addition to that, Charles River is 1.72 times more volatile than Olink Holding AB. It trades about -0.25 of its total potential returns per unit of risk. Olink Holding AB is currently generating about 0.09 per unit of volatility. If you would invest  2,431  in Olink Holding AB on March 22, 2024 and sell it today you would earn a total of  119.00  from holding Olink Holding AB or generate 4.9% return on investment over 90 days.

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

Charles River Laboratories  vs.  Olink Holding AB

Charles River Labora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles River Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Olink Holding AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Olink Holding AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Olink Holding is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Charles River and Olink Holding

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

The idea behind Charles River Laboratories and Olink Holding 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.