Correlation Between BICO Group and Neola Medical

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

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

Diversification Opportunities for BICO Group and Neola Medical

0.28

Correlation Coefficient

BICO Group  Neola Medical

Modest diversification

The 3 months correlation between BICO and Neola is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Neola Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neola Medical AB and BICO Group 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 BICO Group AB are associated (or correlated) with Neola Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neola Medical AB has no effect on the direction of BICO Group i.e., BICO Group and Neola Medical go up and down completely randomly.

Pair Corralation between BICO Group and Neola Medical

Assuming the 90 days trading horizon BICO Group AB is expected to generate 1.19 times more return on investment than Neola Medical. However, BICO Group is 1.19 times more volatile than Neola Medical AB. It trades about 0.01 of its potential returns per unit of risk. Neola Medical AB is currently generating about -0.04 per unit of risk. If you would invest  3,606  in BICO Group AB on April 20, 2025 and sell it today you would lose (8.00) from holding BICO Group AB or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

BICO Group AB  vs.  Neola Medical AB

BICO Group AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BICO Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BICO Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Neola Medical AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neola Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Neola Medical 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 BICO Group and Neola Medical

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

The idea behind BICO Group AB and Neola Medical 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.