Correlation Between Bionoid Pharma and Cannlabs

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

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

Diversification Opportunities for Bionoid Pharma and Cannlabs

0.04

Correlation Coefficient

Bionoid Pharma  Cannlabs

Significant diversification

The 3 months correlation between Bionoid and Cannlabs is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bionoid Pharma and Cannlabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannlabs and Bionoid Pharma 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 Bionoid Pharma are associated (or correlated) with Cannlabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannlabs has no effect on the direction of Bionoid Pharma i.e., Bionoid Pharma and Cannlabs go up and down completely randomly.

Pair Corralation between Bionoid Pharma and Cannlabs

If you would invest  20.00  in Bionoid Pharma on October 26, 2024 and sell it today you would earn a total of  8.00  from holding Bionoid Pharma or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Bionoid Pharma  vs.  Cannlabs

Bionoid Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bionoid Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Bionoid Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Cannlabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cannlabs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cannlabs is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bionoid Pharma and Cannlabs

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

The idea behind Bionoid Pharma and Cannlabs 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.