Correlation Between Icares Medicus and Bioteque

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

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

Diversification Opportunities for Icares Medicus and Bioteque

0.36

Correlation Coefficient

Icares Medicus  Bioteque

Weak diversification

The 3 months correlation between Icares and Bioteque is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Icares Medicus and Bioteque in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioteque and Icares Medicus 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 Icares Medicus 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 Icares Medicus i.e., Icares Medicus and Bioteque go up and down completely randomly.

Pair Corralation between Icares Medicus and Bioteque

Assuming the 90 days trading horizon Icares Medicus is expected to generate 1.69 times more return on investment than Bioteque. However, Icares Medicus is 1.69 times more volatile than Bioteque. It trades about 0.03 of its potential returns per unit of risk. Bioteque is currently generating about 0.03 per unit of risk. If you would invest  12,350  in Icares Medicus on December 29, 2024 and sell it today you would earn a total of  250.00  from holding Icares Medicus or generate 2.02% return on investment over 90 days.

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

Icares Medicus  vs.  Bioteque

Icares Medicus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icares Medicus are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Icares Medicus is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bioteque

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bioteque are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Bioteque is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Icares Medicus and Bioteque

The main advantage of trading using opposite Icares Medicus and Bioteque positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icares Medicus 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 Icares Medicus 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.