Correlation Between Biotron and Axim Biotechnologies

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

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

Diversification Opportunities for Biotron and Axim Biotechnologies

0.37

Correlation Coefficient

Biotron  Axim Biotechnologies

Weak diversification

The 3 months correlation between Biotron and Axim is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Biotron Limited and Axim Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axim Biotechnologies and Biotron 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 Biotron Limited are associated (or correlated) with Axim Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axim Biotechnologies has no effect on the direction of Biotron i.e., Biotron and Axim Biotechnologies go up and down completely randomly.

Pair Corralation between Biotron and Axim Biotechnologies

Assuming the 90 days horizon Biotron Limited is expected to under-perform the Axim Biotechnologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Biotron Limited is 2.14 times less risky than Axim Biotechnologies. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Axim Biotechnologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  0.70  in Axim Biotechnologies on September 3, 2024 and sell it today you would lose (0.50) from holding Axim Biotechnologies or give up 71.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Biotron Limited  vs.  Axim Biotechnologies

Biotron Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biotron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Axim Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axim Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Biotron and Axim Biotechnologies

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

The idea behind Biotron Limited and Axim Biotechnologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.