Correlation Between All American and BioCube

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

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

Diversification Opportunities for All American and BioCube

0.0

Correlation Coefficient

All American  BioCube

Pay attention - limited upside

The 3 months correlation between All and BioCube is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding All American Gld and BioCube in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioCube and All American 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 All American Gld are associated (or correlated) with BioCube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioCube has no effect on the direction of All American i.e., All American and BioCube go up and down completely randomly.

Pair Corralation between All American and BioCube

If you would invest  0.10  in All American Gld on October 26, 2024 and sell it today you would earn a total of  0.02  from holding All American Gld or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

All American Gld  vs.  BioCube

All American Gld

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in All American Gld are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, All American exhibited solid returns over the last few months and may actually be approaching a breakup point.

BioCube

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioCube has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, BioCube is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with All American and BioCube

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

The idea behind All American Gld and BioCube 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.