Correlation Between BRIM Biotechnology and Daxin Materials

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

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

Diversification Opportunities for BRIM Biotechnology and Daxin Materials

0.37

Correlation Coefficient

BRIM Biotechnology  Daxin Materials

Weak diversification

The 3 months correlation between BRIM and Daxin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp 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 Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of BRIM Biotechnology i.e., BRIM Biotechnology and Daxin Materials go up and down completely randomly.

Pair Corralation between BRIM Biotechnology and Daxin Materials

Assuming the 90 days trading horizon BRIM Biotechnology is expected to under-perform the Daxin Materials. But the stock apears to be less risky and, when comparing its historical volatility, BRIM Biotechnology is 1.8 times less risky than Daxin Materials. The stock trades about -0.07 of its potential returns per unit of risk. The Daxin Materials Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21,000  in Daxin Materials Corp on December 5, 2024 and sell it today you would earn a total of  650.00  from holding Daxin Materials Corp or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.65%
Values	Daily Returns

BRIM Biotechnology  vs.  Daxin Materials Corp

BRIM Biotechnology

Risk-Adjusted Performance

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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Daxin Materials Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daxin Materials Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Daxin Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BRIM Biotechnology and Daxin Materials

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

The idea behind BRIM Biotechnology and Daxin Materials Corp 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.