Correlation Between Biome Technologies and Helios Towers

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

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

Diversification Opportunities for Biome Technologies and Helios Towers

0.89

Correlation Coefficient

Biome Technologies  Helios Towers

Very poor diversification

The 3 months correlation between Biome and Helios is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Biome Technologies Plc and Helios Towers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Towers Plc and Biome Technologies 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 Technologies Plc are associated (or correlated) with Helios Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Towers Plc has no effect on the direction of Biome Technologies i.e., Biome Technologies and Helios Towers go up and down completely randomly.

Pair Corralation between Biome Technologies and Helios Towers

Assuming the 90 days trading horizon Biome Technologies Plc is expected to under-perform the Helios Towers. In addition to that, Biome Technologies is 3.01 times more volatile than Helios Towers Plc. It trades about -0.21 of its total potential returns per unit of risk. Helios Towers Plc is currently generating about -0.2 per unit of volatility. If you would invest  9,630  in Helios Towers Plc on September 23, 2024 and sell it today you would lose (420.00) from holding Helios Towers Plc or give up 4.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Biome Technologies Plc  vs.  Helios Towers Plc

Biome Technologies Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biome Technologies Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Helios Towers Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Towers Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Biome Technologies and Helios Towers

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

The idea behind Biome Technologies Plc and Helios Towers Plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.