Correlation Between Bioter SA and Wool Industry

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

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

Diversification Opportunities for Bioter SA and Wool Industry

-0.21

Correlation Coefficient

Bioter SA  Wool Industry

Very good diversification

The 3 months correlation between Bioter and Wool is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bioter SA and Wool Industry Tria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wool Industry Tria and Bioter SA 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 Bioter SA are associated (or correlated) with Wool Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wool Industry Tria has no effect on the direction of Bioter SA i.e., Bioter SA and Wool Industry go up and down completely randomly.

Pair Corralation between Bioter SA and Wool Industry

Assuming the 90 days trading horizon Bioter SA is expected to generate 0.89 times more return on investment than Wool Industry. However, Bioter SA is 1.13 times less risky than Wool Industry. It trades about 0.02 of its potential returns per unit of risk. Wool Industry Tria is currently generating about 0.0 per unit of risk. If you would invest  26.00  in Bioter SA on October 21, 2024 and sell it today you would lose (1.00) from holding Bioter SA or give up 3.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Bioter SA  vs.  Wool Industry Tria

Bioter SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wool Industry Tria

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wool Industry Tria are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wool Industry may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bioter SA and Wool Industry

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

The idea behind Bioter SA and Wool Industry Tria 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.