Correlation Between BioInvent International and Karolinska Development

Can any of the company-specific risk be diversified away by investing in both BioInvent International and Karolinska Development 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 BioInvent International and Karolinska Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for BioInvent International and Karolinska Development

0.4

Correlation Coefficient

BioInvent International  Karolinska Development

Very weak diversification

The 3 months correlation between BioInvent and Karolinska is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BioInvent International AB and Karolinska Development AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karolinska Development and BioInvent International 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 BioInvent International AB are associated (or correlated) with Karolinska Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karolinska Development has no effect on the direction of BioInvent International i.e., BioInvent International and Karolinska Development go up and down completely randomly.

Pair Corralation between BioInvent International and Karolinska Development

Assuming the 90 days trading horizon BioInvent International AB is expected to generate 1.88 times more return on investment than Karolinska Development. However, BioInvent International is 1.88 times more volatile than Karolinska Development AB. It trades about 0.13 of its potential returns per unit of risk. Karolinska Development AB is currently generating about 0.08 per unit of risk. If you would invest  2,910  in BioInvent International AB on April 23, 2025 and sell it today you would earn a total of  1,050  from holding BioInvent International AB or generate 36.08% return on investment over 90 days.

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

BioInvent International AB  vs.  Karolinska Development AB

BioInvent International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioInvent International AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BioInvent International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Karolinska Development

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karolinska Development AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karolinska Development may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BioInvent International and Karolinska Development

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

The idea behind BioInvent International AB and Karolinska Development 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.