Correlation Between BRIM Biotechnology and Transcend Information

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

By analyzing existing cross correlation between BRIM Biotechnology and Transcend Information, you can compare the effects of market volatilities on BRIM Biotechnology and Transcend Information 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 Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIM Biotechnology and Transcend Information.

Diversification Opportunities for BRIM Biotechnology and Transcend Information

0.7

Correlation Coefficient

BRIM Biotechnology  Transcend Information

Poor diversification

The 3 months correlation between BRIM and Transcend is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information 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 Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of BRIM Biotechnology i.e., BRIM Biotechnology and Transcend Information go up and down completely randomly.

Pair Corralation between BRIM Biotechnology and Transcend Information

Assuming the 90 days trading horizon BRIM Biotechnology is expected to under-perform the Transcend Information. In addition to that, BRIM Biotechnology is 1.34 times more volatile than Transcend Information. It trades about -0.2 of its total potential returns per unit of risk. Transcend Information is currently generating about -0.1 per unit of volatility. If you would invest  9,900  in Transcend Information on September 16, 2024 and sell it today you would lose (840.00) from holding Transcend Information or give up 8.48% of portfolio value over 90 days.

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

BRIM Biotechnology  vs.  Transcend Information

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 uncertain 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.

Transcend Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcend Information 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 BRIM Biotechnology and Transcend Information

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

The idea behind BRIM Biotechnology and Transcend Information 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.