Correlation Between Bavarian Nordic and GomSpace Group

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

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

Diversification Opportunities for Bavarian Nordic and GomSpace Group

0.5

Correlation Coefficient

Bavarian Nordic  GomSpace Group

Very weak diversification

The 3 months correlation between Bavarian and GomSpace is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and GomSpace Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GomSpace Group AB and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with GomSpace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GomSpace Group AB has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and GomSpace Group go up and down completely randomly.

Pair Corralation between Bavarian Nordic and GomSpace Group

Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 1.74 times less return on investment than GomSpace Group. But when comparing it to its historical volatility, Bavarian Nordic is 2.21 times less risky than GomSpace Group. It trades about 0.22 of its potential returns per unit of risk. GomSpace Group AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  770.00  in GomSpace Group AB on May 6, 2025 and sell it today you would earn a total of  672.00  from holding GomSpace Group AB or generate 87.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Bavarian Nordic  vs.  GomSpace Group AB

Bavarian Nordic

Risk-Adjusted Performance

Solid

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

GomSpace Group AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GomSpace Group AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, GomSpace Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bavarian Nordic and GomSpace Group

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

The idea behind Bavarian Nordic and GomSpace Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.