Correlation Between BRIM Biotechnology and Acelon Chemicals

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

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

Diversification Opportunities for BRIM Biotechnology and Acelon Chemicals

-0.19

Correlation Coefficient

BRIM Biotechnology  Acelon Chemicals

Good diversification

The 3 months correlation between BRIM and Acelon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Acelon Chemicals Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acelon Chemicals Fiber and BRIM 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 BRIM Biotechnology are associated (or correlated) with Acelon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acelon Chemicals Fiber has no effect on the direction of BRIM Biotechnology i.e., BRIM Biotechnology and Acelon Chemicals go up and down completely randomly.

Pair Corralation between BRIM Biotechnology and Acelon Chemicals

Assuming the 90 days trading horizon BRIM Biotechnology is expected to under-perform the Acelon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, BRIM Biotechnology is 1.21 times less risky than Acelon Chemicals. The stock trades about -0.21 of its potential returns per unit of risk. The Acelon Chemicals Fiber is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Acelon Chemicals Fiber on September 20, 2024 and sell it today you would lose (40.00) from holding Acelon Chemicals Fiber or give up 3.12% of portfolio value over 90 days.

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

BRIM Biotechnology  vs.  Acelon Chemicals Fiber

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.

Acelon Chemicals Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acelon Chemicals Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acelon Chemicals 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 BRIM Biotechnology and Acelon Chemicals

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

The idea behind BRIM Biotechnology and Acelon Chemicals Fiber 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.