Correlation Between Biotage AB and MedCap AB

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

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

Diversification Opportunities for Biotage AB and MedCap AB

0.48

Correlation Coefficient

Biotage AB  MedCap AB

Very weak diversification

The 3 months correlation between Biotage and MedCap is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Biotage AB and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap 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 MedCap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedCap AB has no effect on the direction of Biotage AB i.e., Biotage AB and MedCap AB go up and down completely randomly.

Pair Corralation between Biotage AB and MedCap AB

Assuming the 90 days trading horizon Biotage AB is expected to generate 11.13 times less return on investment than MedCap AB. But when comparing it to its historical volatility, Biotage AB is 8.45 times less risky than MedCap AB. It trades about 0.17 of its potential returns per unit of risk. MedCap AB is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  40,500  in MedCap AB on April 24, 2025 and sell it today you would earn a total of  11,900  from holding MedCap AB or generate 29.38% return on investment over 90 days.

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

Biotage AB  vs.  MedCap AB

Biotage AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biotage AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Biotage AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MedCap AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MedCap AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MedCap AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biotage AB and MedCap AB

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

The idea behind Biotage AB and MedCap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.