Correlation Between Biomerica and Helius Medical

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

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

Diversification Opportunities for Biomerica and Helius Medical

-0.17

Correlation Coefficient

Biomerica  Helius Medical

Good diversification

The 3 months correlation between Biomerica and Helius is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Biomerica and Helius Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helius Medical Techn and Biomerica 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 Biomerica are associated (or correlated) with Helius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helius Medical Techn has no effect on the direction of Biomerica i.e., Biomerica and Helius Medical go up and down completely randomly.

Pair Corralation between Biomerica and Helius Medical

Given the investment horizon of 90 days Biomerica is expected to generate 0.82 times more return on investment than Helius Medical. However, Biomerica is 1.22 times less risky than Helius Medical. It trades about -0.04 of its potential returns per unit of risk. Helius Medical Technologies is currently generating about -0.05 per unit of risk. If you would invest  296.00  in Biomerica on October 5, 2024 and sell it today you would lose (266.00) from holding Biomerica or give up 89.86% of portfolio value over 90 days.

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

Biomerica  vs.  Helius Medical Technologies

Biomerica

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerica are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomerica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Helius Medical Techn

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomerica and Helius Medical

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

The idea behind Biomerica and Helius Medical Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.