Correlation Between BIO UV and Glob Bioenergi

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

By analyzing existing cross correlation between BIO UV Group and Glob Bioenergi, you can compare the effects of market volatilities on BIO UV and Glob Bioenergi 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 BIO UV with a short position of Glob Bioenergi. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO UV and Glob Bioenergi.

Diversification Opportunities for BIO UV and Glob Bioenergi

-0.37

Correlation Coefficient

BIO UV  Glob Bioenergi

Very good diversification

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

Pair Corralation between BIO UV and Glob Bioenergi

Assuming the 90 days trading horizon BIO UV Group is expected to under-perform the Glob Bioenergi. But the stock apears to be less risky and, when comparing its historical volatility, BIO UV Group is 3.48 times less risky than Glob Bioenergi. The stock trades about -0.08 of its potential returns per unit of risk. The Glob Bioenergi is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Glob Bioenergi on December 29, 2024 and sell it today you would earn a total of  46.00  from holding Glob Bioenergi or generate 53.49% return on investment over 90 days.

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

BIO UV Group  vs.  Glob Bioenergi

BIO UV Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days BIO UV Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Glob Bioenergi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glob Bioenergi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Glob Bioenergi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIO UV and Glob Bioenergi

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

The idea behind BIO UV Group and Glob Bioenergi 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.