Correlation Between Biome Grow and Halo Collective

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

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

Diversification Opportunities for Biome Grow and Halo Collective

0.0

Correlation Coefficient

Biome Grow  Halo Collective

Pay attention - limited upside

The 3 months correlation between Biome and Halo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biome Grow and Halo Collective in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halo Collective 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 Halo Collective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halo Collective has no effect on the direction of Biome Grow i.e., Biome Grow and Halo Collective go up and down completely randomly.

Pair Corralation between Biome Grow and Halo Collective

Assuming the 90 days horizon Biome Grow is expected to generate 1.12 times less return on investment than Halo Collective. But when comparing it to its historical volatility, Biome Grow is 1.73 times less risky than Halo Collective. It trades about 0.1 of its potential returns per unit of risk. Halo Collective is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Halo Collective on September 29, 2024 and sell it today you would lose (3.49) from holding Halo Collective or give up 99.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Biome Grow  vs.  Halo Collective

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.

Halo Collective

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Biome Grow and Halo Collective

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

The idea behind Biome Grow and Halo Collective 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.