Correlation Between BRIM Biotechnology and Golden Biotechnology

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Can any of the company-specific risk be diversified away by investing in both BRIM Biotechnology and Golden Biotechnology 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 Golden Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIM Biotechnology and Golden Biotechnology, you can compare the effects of market volatilities on BRIM Biotechnology and Golden Biotechnology 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 Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIM Biotechnology and Golden Biotechnology.

Diversification Opportunities for BRIM Biotechnology and Golden Biotechnology

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between BRIM and Golden is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology 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 Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of BRIM Biotechnology i.e., BRIM Biotechnology and Golden Biotechnology go up and down completely randomly.

Pair Corralation between BRIM Biotechnology and Golden Biotechnology

Assuming the 90 days trading horizon BRIM Biotechnology is expected to generate 1.11 times more return on investment than Golden Biotechnology. However, BRIM Biotechnology is 1.11 times more volatile than Golden Biotechnology. It trades about -0.25 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.3 per unit of risk. If you would invest  4,265  in BRIM Biotechnology on September 17, 2024 and sell it today you would lose (495.00) from holding BRIM Biotechnology or give up 11.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

BRIM Biotechnology  vs.  Golden Biotechnology

 Performance 
       Timeline  
BRIM Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Golden Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Golden 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.

BRIM Biotechnology and Golden Biotechnology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BRIM Biotechnology and Golden Biotechnology

The main advantage of trading using opposite BRIM Biotechnology and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIM Biotechnology position performs unexpectedly, Golden Biotechnology 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 Golden Biotechnology will offset losses from the drop in Golden Biotechnology's long position.
The idea behind BRIM Biotechnology and Golden Biotechnology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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