Correlation Between Biome Technologies and Ondine Biomedical

Can any of the company-specific risk be diversified away by investing in both Biome Technologies and Ondine Biomedical 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 Ondine Biomedical 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 Ondine Biomedical, you can compare the effects of market volatilities on Biome Technologies and Ondine Biomedical 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 Ondine Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biome Technologies and Ondine Biomedical.

Diversification Opportunities for Biome Technologies and Ondine Biomedical

-0.63

Correlation Coefficient

Biome Technologies  Ondine Biomedical

Excellent diversification

The 3 months correlation between Biome and Ondine is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Biome Technologies Plc and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical 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 Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of Biome Technologies i.e., Biome Technologies and Ondine Biomedical go up and down completely randomly.

Pair Corralation between Biome Technologies and Ondine Biomedical

Assuming the 90 days trading horizon Biome Technologies Plc is expected to under-perform the Ondine Biomedical. In addition to that, Biome Technologies is 1.5 times more volatile than Ondine Biomedical. It trades about -0.21 of its total potential returns per unit of risk. Ondine Biomedical is currently generating about 0.08 per unit of volatility. If you would invest  825.00  in Ondine Biomedical on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Ondine Biomedical or generate 3.03% return on investment over 90 days.

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

Biome Technologies Plc  vs.  Ondine Biomedical

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.

Ondine Biomedical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ondine Biomedical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ondine Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biome Technologies and Ondine Biomedical

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

The idea behind Biome Technologies Plc and Ondine Biomedical 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.