Correlation Between BC Bud and HLS Therapeutics

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

By analyzing existing cross correlation between The BC Bud and HLS Therapeutics, you can compare the effects of market volatilities on BC Bud and HLS Therapeutics 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 BC Bud with a short position of HLS Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC Bud and HLS Therapeutics.

Diversification Opportunities for BC Bud and HLS Therapeutics

-0.16

Correlation Coefficient

BC Bud  HLS Therapeutics

Good diversification

The 3 months correlation between BCBCF and HLS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The BC Bud and HLS Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLS Therapeutics and BC Bud 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 The BC Bud are associated (or correlated) with HLS Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLS Therapeutics has no effect on the direction of BC Bud i.e., BC Bud and HLS Therapeutics go up and down completely randomly.

Pair Corralation between BC Bud and HLS Therapeutics

Assuming the 90 days horizon BC Bud is expected to generate 1.47 times less return on investment than HLS Therapeutics. In addition to that, BC Bud is 3.26 times more volatile than HLS Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. HLS Therapeutics is currently generating about 0.05 per unit of volatility. If you would invest  273.00  in HLS Therapeutics on December 3, 2024 and sell it today you would earn a total of  18.00  from holding HLS Therapeutics or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

The BC Bud  vs.  HLS Therapeutics

BC Bud

Risk-Adjusted Performance

Very Weak

Over the last 90 days The BC Bud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak fundamental indicators, BC Bud may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HLS Therapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HLS Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BC Bud and HLS Therapeutics

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

The idea behind The BC Bud and HLS Therapeutics 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.