Correlation Between INtRON Biotechnology and EBEST Investment

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

By analyzing existing cross correlation between iNtRON Biotechnology and EBEST Investment Securities, you can compare the effects of market volatilities on INtRON Biotechnology and EBEST Investment 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 INtRON Biotechnology with a short position of EBEST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of INtRON Biotechnology and EBEST Investment.

Diversification Opportunities for INtRON Biotechnology and EBEST Investment

0.76

Correlation Coefficient

INtRON Biotechnology  EBEST Investment

Poor diversification

The 3 months correlation between INtRON and EBEST is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iNtRON Biotechnology and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec and INtRON Biotechnology 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 iNtRON Biotechnology are associated (or correlated) with EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of INtRON Biotechnology i.e., INtRON Biotechnology and EBEST Investment go up and down completely randomly.

Pair Corralation between INtRON Biotechnology and EBEST Investment

Assuming the 90 days trading horizon iNtRON Biotechnology is expected to generate 2.46 times more return on investment than EBEST Investment. However, INtRON Biotechnology is 2.46 times more volatile than EBEST Investment Securities. It trades about 0.0 of its potential returns per unit of risk. EBEST Investment Securities is currently generating about -0.13 per unit of risk. If you would invest  585,000  in iNtRON Biotechnology on September 27, 2024 and sell it today you would lose (17,000) from holding iNtRON Biotechnology or give up 2.91% of portfolio value over 90 days.

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

iNtRON Biotechnology  vs.  EBEST Investment Securities

iNtRON Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iNtRON Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INtRON Biotechnology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with INtRON Biotechnology and EBEST Investment

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

The idea behind iNtRON Biotechnology and EBEST Investment Securities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.