Correlation Between TR Biofab and Ray

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

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

Diversification Opportunities for TR Biofab and Ray

-0.42

Correlation Coefficient

TR Biofab  Ray

Very good diversification

The 3 months correlation between 246710 and Ray is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding TR Biofab Co and Ray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ray Co and TR Biofab 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 TR Biofab Co are associated (or correlated) with Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ray Co has no effect on the direction of TR Biofab i.e., TR Biofab and Ray go up and down completely randomly.

Pair Corralation between TR Biofab and Ray

Assuming the 90 days trading horizon TR Biofab is expected to generate 8.39 times less return on investment than Ray. In addition to that, TR Biofab is 1.15 times more volatile than Ray Co. It trades about 0.02 of its total potential returns per unit of risk. Ray Co is currently generating about 0.15 per unit of volatility. If you would invest  582,000  in Ray Co on December 30, 2024 and sell it today you would earn a total of  218,000  from holding Ray Co or generate 37.46% return on investment over 90 days.

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

TR Biofab Co  vs.  Ray Co

TR Biofab

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TR Biofab Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TR Biofab is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ray Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ray Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ray sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TR Biofab and Ray

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

The idea behind TR Biofab Co and Ray Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.