Correlation Between Auto Trader and Bioventix

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

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

Diversification Opportunities for Auto Trader and Bioventix

0.87

Correlation Coefficient

Auto Trader  Bioventix

Very poor diversification

The 3 months correlation between Auto and Bioventix is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Bioventix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventix and Auto Trader 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 Auto Trader Group are associated (or correlated) with Bioventix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventix has no effect on the direction of Auto Trader i.e., Auto Trader and Bioventix go up and down completely randomly.

Pair Corralation between Auto Trader and Bioventix

Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.51 times more return on investment than Bioventix. However, Auto Trader Group is 1.97 times less risky than Bioventix. It trades about -0.11 of its potential returns per unit of risk. Bioventix is currently generating about -0.22 per unit of risk. If you would invest  82,972  in Auto Trader Group on December 1, 2024 and sell it today you would lose (5,412) from holding Auto Trader Group or give up 6.52% of portfolio value over 90 days.

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

Auto Trader Group  vs.  Bioventix

Auto Trader Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bioventix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bioventix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Auto Trader and Bioventix

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

The idea behind Auto Trader Group and Bioventix 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.