Correlation Between Burning Rock and Biocept

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

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

Diversification Opportunities for Burning Rock and Biocept

0.39

Correlation Coefficient

Burning Rock  Biocept

Weak diversification

The 3 months correlation between Burning and Biocept is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Biocept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocept and Burning Rock 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 Burning Rock Biotech are associated (or correlated) with Biocept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocept has no effect on the direction of Burning Rock i.e., Burning Rock and Biocept go up and down completely randomly.

Pair Corralation between Burning Rock and Biocept

If you would invest  283.00  in Burning Rock Biotech on August 31, 2024 and sell it today you would earn a total of  248.00  from holding Burning Rock Biotech or generate 87.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Burning Rock Biotech  vs.  Biocept

Burning Rock Biotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock reported solid returns over the last few months and may actually be approaching a breakup point.

Biocept

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocept has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Biocept is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Burning Rock and Biocept

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

The idea behind Burning Rock Biotech and Biocept 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.