Correlation Between Biomedix Incubator and Prime Energy

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

By analyzing existing cross correlation between Biomedix Incubator and Prime Energy PE, you can compare the effects of market volatilities on Biomedix Incubator and Prime Energy 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 Biomedix Incubator with a short position of Prime Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomedix Incubator and Prime Energy.

Diversification Opportunities for Biomedix Incubator and Prime Energy

0.27

Correlation Coefficient

Biomedix Incubator  Prime Energy

Modest diversification

The 3 months correlation between Biomedix and Prime is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Biomedix Incubator and Prime Energy PE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Energy PE and Biomedix Incubator 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 Biomedix Incubator are associated (or correlated) with Prime Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Energy PE has no effect on the direction of Biomedix Incubator i.e., Biomedix Incubator and Prime Energy go up and down completely randomly.

Pair Corralation between Biomedix Incubator and Prime Energy

Assuming the 90 days trading horizon Biomedix Incubator is expected to generate 11.11 times less return on investment than Prime Energy. But when comparing it to its historical volatility, Biomedix Incubator is 2.44 times less risky than Prime Energy. It trades about 0.06 of its potential returns per unit of risk. Prime Energy PE is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  67,790  in Prime Energy PE on December 1, 2024 and sell it today you would earn a total of  75,610  from holding Prime Energy PE or generate 111.54% return on investment over 90 days.

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

Biomedix Incubator  vs.  Prime Energy PE

Biomedix Incubator

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biomedix Incubator are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomedix Incubator may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Prime Energy PE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Energy PE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Prime Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomedix Incubator and Prime Energy

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

The idea behind Biomedix Incubator and Prime Energy PE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.