Correlation Between Alpha Cognition and Biotron

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

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

Diversification Opportunities for Alpha Cognition and Biotron

0.38

Correlation Coefficient

Alpha Cognition  Biotron

Weak diversification

The 3 months correlation between Alpha and Biotron is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Cognition and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and Alpha Cognition 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 Alpha Cognition are associated (or correlated) with Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Alpha Cognition i.e., Alpha Cognition and Biotron go up and down completely randomly.

Pair Corralation between Alpha Cognition and Biotron

Assuming the 90 days horizon Alpha Cognition is expected to under-perform the Biotron. In addition to that, Alpha Cognition is 1.72 times more volatile than Biotron Limited. It trades about -0.07 of its total potential returns per unit of risk. Biotron Limited is currently generating about 0.02 per unit of volatility. If you would invest  1.11  in Biotron Limited on September 12, 2024 and sell it today you would lose (0.01) from holding Biotron Limited or give up 0.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alpha Cognition  vs.  Biotron Limited

Alpha Cognition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Cognition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Biotron Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biotron Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Biotron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alpha Cognition and Biotron

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

The idea behind Alpha Cognition and Biotron Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.