Correlation Between Bionomics and Accustem Sciences

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

By analyzing existing cross correlation between Bionomics Ltd ADR and Accustem Sciences, you can compare the effects of market volatilities on Bionomics and Accustem Sciences 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 Bionomics with a short position of Accustem Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bionomics and Accustem Sciences.

Diversification Opportunities for Bionomics and Accustem Sciences

0.17

Correlation Coefficient

Bionomics  Accustem Sciences

Average diversification

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

Pair Corralation between Bionomics and Accustem Sciences

Given the investment horizon of 90 days Bionomics is expected to generate 1.96 times less return on investment than Accustem Sciences. But when comparing it to its historical volatility, Bionomics Ltd ADR is 2.03 times less risky than Accustem Sciences. It trades about 0.14 of its potential returns per unit of risk. Accustem Sciences is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Accustem Sciences on December 30, 2024 and sell it today you would earn a total of  28.00  from holding Accustem Sciences or generate 116.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.92%
Values	Daily Returns

Bionomics Ltd ADR  vs.  Accustem Sciences

Bionomics ADR

Risk-Adjusted Performance

Good

Over the last 90 days Bionomics Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Bionomics showed solid returns over the last few months and may actually be approaching a breakup point.

Accustem Sciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accustem Sciences are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Accustem Sciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bionomics and Accustem Sciences

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

The idea behind Bionomics Ltd ADR and Accustem Sciences 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.