Correlation Between BioAdaptives and NUZE Old

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

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

Diversification Opportunities for BioAdaptives and NUZE Old

-0.1

Correlation Coefficient

BioAdaptives  NUZE Old

Good diversification

The 3 months correlation between BioAdaptives and NUZE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BioAdaptives and NUZE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUZE Old and BioAdaptives 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 BioAdaptives are associated (or correlated) with NUZE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUZE Old has no effect on the direction of BioAdaptives i.e., BioAdaptives and NUZE Old go up and down completely randomly.

Pair Corralation between BioAdaptives and NUZE Old

Given the investment horizon of 90 days BioAdaptives is expected to generate 1.54 times more return on investment than NUZE Old. However, BioAdaptives is 1.54 times more volatile than NUZE Old. It trades about 0.14 of its potential returns per unit of risk. NUZE Old is currently generating about 0.1 per unit of risk. If you would invest  0.07  in BioAdaptives on September 5, 2024 and sell it today you would earn a total of  5.93  from holding BioAdaptives or generate 8471.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.63%
Values	Daily Returns

BioAdaptives  vs.  NUZE Old

BioAdaptives

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioAdaptives are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BioAdaptives unveiled solid returns over the last few months and may actually be approaching a breakup point.

NUZE Old

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days NUZE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, NUZE Old exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioAdaptives and NUZE Old

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

The idea behind BioAdaptives and NUZE Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.