Correlation Between Pegavision and Bioteque

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

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

Diversification Opportunities for Pegavision and Bioteque

0.72

Correlation Coefficient

Pegavision  Bioteque

Poor diversification

The 3 months correlation between Pegavision and Bioteque is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pegavision and Bioteque in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioteque and Pegavision 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 Pegavision are associated (or correlated) with Bioteque. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioteque has no effect on the direction of Pegavision i.e., Pegavision and Bioteque go up and down completely randomly.

Pair Corralation between Pegavision and Bioteque

Assuming the 90 days trading horizon Pegavision is expected to under-perform the Bioteque. In addition to that, Pegavision is 2.11 times more volatile than Bioteque. It trades about -0.16 of its total potential returns per unit of risk. Bioteque is currently generating about -0.15 per unit of volatility. If you would invest  12,550  in Bioteque on September 23, 2024 and sell it today you would lose (600.00) from holding Bioteque or give up 4.78% of portfolio value over 90 days.

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

Pegavision  vs.  Bioteque

Pegavision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegavision 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.

Bioteque

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioteque 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 Pegavision and Bioteque

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

The idea behind Pegavision and Bioteque 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.