Correlation Between Cayman Tung and BRIM Biotechnology

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

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

Diversification Opportunities for Cayman Tung and BRIM Biotechnology

0.76

Correlation Coefficient

Cayman Tung  BRIM Biotechnology

Poor diversification

The 3 months correlation between Cayman and BRIM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cayman Tung Ling and BRIM Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIM Biotechnology and Cayman Tung 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 Cayman Tung Ling 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 Cayman Tung i.e., Cayman Tung and BRIM Biotechnology go up and down completely randomly.

Pair Corralation between Cayman Tung and BRIM Biotechnology

Assuming the 90 days trading horizon Cayman Tung Ling is expected to under-perform the BRIM Biotechnology. In addition to that, Cayman Tung is 1.14 times more volatile than BRIM Biotechnology. It trades about -0.17 of its total potential returns per unit of risk. BRIM Biotechnology is currently generating about -0.14 per unit of volatility. If you would invest  4,800  in BRIM Biotechnology on September 3, 2024 and sell it today you would lose (625.00) from holding BRIM Biotechnology or give up 13.02% of portfolio value over 90 days.

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

Cayman Tung Ling  vs.  BRIM Biotechnology

Cayman Tung Ling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayman Tung Ling 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BRIM Biotechnology

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cayman Tung and BRIM Biotechnology

The main advantage of trading using opposite Cayman Tung and BRIM Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cayman Tung 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 Cayman Tung Ling 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.