Correlation Between Biome Grow and Avicanna

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

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

Diversification Opportunities for Biome Grow and Avicanna

-0.4

Correlation Coefficient

Biome Grow  Avicanna

Very good diversification

The 3 months correlation between Biome and Avicanna is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Biome Grow and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Biome Grow 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 Biome Grow are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Biome Grow i.e., Biome Grow and Avicanna go up and down completely randomly.

Pair Corralation between Biome Grow and Avicanna

Assuming the 90 days horizon Biome Grow is expected to generate 5.1 times more return on investment than Avicanna. However, Biome Grow is 5.1 times more volatile than Avicanna. It trades about 0.13 of its potential returns per unit of risk. Avicanna is currently generating about 0.0 per unit of risk. If you would invest  0.37  in Biome Grow on September 29, 2024 and sell it today you would earn a total of  0.37  from holding Biome Grow or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Biome Grow  vs.  Avicanna

Biome Grow

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biome Grow are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Biome Grow reported solid returns over the last few months and may actually be approaching a breakup point.

Avicanna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avicanna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Avicanna is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Biome Grow and Avicanna

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

The idea behind Biome Grow and Avicanna 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.