Correlation Between Level Biotechnology and EirGenix

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

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

Diversification Opportunities for Level Biotechnology and EirGenix

0.14

Correlation Coefficient

Level Biotechnology  EirGenix

Average diversification

The 3 months correlation between Level and EirGenix is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Level Biotechnology and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix and Level 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 Level Biotechnology are associated (or correlated) with EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of Level Biotechnology i.e., Level Biotechnology and EirGenix go up and down completely randomly.

Pair Corralation between Level Biotechnology and EirGenix

Assuming the 90 days trading horizon Level Biotechnology is expected to generate 0.14 times more return on investment than EirGenix. However, Level Biotechnology is 7.34 times less risky than EirGenix. It trades about -0.03 of its potential returns per unit of risk. EirGenix is currently generating about -0.25 per unit of risk. If you would invest  3,200  in Level Biotechnology on October 10, 2024 and sell it today you would lose (10.00) from holding Level Biotechnology or give up 0.31% of portfolio value over 90 days.

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

Level Biotechnology  vs.  EirGenix

Level Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

EirGenix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EirGenix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Level Biotechnology and EirGenix

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

The idea behind Level Biotechnology and EirGenix 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.