Correlation Between BioForce Nanosciences and BAB

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

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

Diversification Opportunities for BioForce Nanosciences and BAB

-0.47

Correlation Coefficient

BioForce Nanosciences  BAB

Very good diversification

The 3 months correlation between BioForce and BAB is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BioForce Nanosciences Holdings and BAB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAB Inc and BioForce Nanosciences 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 BioForce Nanosciences Holdings are associated (or correlated) with BAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAB Inc has no effect on the direction of BioForce Nanosciences i.e., BioForce Nanosciences and BAB go up and down completely randomly.

Pair Corralation between BioForce Nanosciences and BAB

Given the investment horizon of 90 days BioForce Nanosciences Holdings is expected to generate 6.75 times more return on investment than BAB. However, BioForce Nanosciences is 6.75 times more volatile than BAB Inc. It trades about 0.08 of its potential returns per unit of risk. BAB Inc is currently generating about -0.01 per unit of risk. If you would invest  84.00  in BioForce Nanosciences Holdings on October 8, 2024 and sell it today you would lose (9.00) from holding BioForce Nanosciences Holdings or give up 10.71% of portfolio value over 90 days.

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

BioForce Nanosciences Holdings  vs.  BAB Inc

BioForce Nanosciences

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioForce Nanosciences Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, BioForce Nanosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BAB Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BAB Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, BAB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BioForce Nanosciences and BAB

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

The idea behind BioForce Nanosciences Holdings and BAB Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.