Correlation Between Transcend Information and BRIM Biotechnology

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

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

Diversification Opportunities for Transcend Information and BRIM Biotechnology

-0.21

Correlation Coefficient

Transcend Information  BRIM Biotechnology

Very good diversification

The 3 months correlation between Transcend and BRIM is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Transcend Information and BRIM Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIM Biotechnology and Transcend Information 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 Transcend Information are associated (or correlated) with BRIM Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIM Biotechnology has no effect on the direction of Transcend Information i.e., Transcend Information and BRIM Biotechnology go up and down completely randomly.

Pair Corralation between Transcend Information and BRIM Biotechnology

Assuming the 90 days trading horizon Transcend Information is expected to generate 5.16 times less return on investment than BRIM Biotechnology. But when comparing it to its historical volatility, Transcend Information is 1.47 times less risky than BRIM Biotechnology. It trades about 0.06 of its potential returns per unit of risk. BRIM Biotechnology is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,900  in BRIM Biotechnology on December 5, 2024 and sell it today you would earn a total of  115.00  from holding BRIM Biotechnology or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Transcend Information  vs.  BRIM Biotechnology

Transcend Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcend Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Transcend Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BRIM Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRIM Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Transcend Information and BRIM Biotechnology

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

The idea behind Transcend Information and BRIM Biotechnology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.