Correlation Between Burning Rock and Cns Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Burning Rock and Cns Pharmaceuticals 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 Cns Pharmaceuticals 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 Cns Pharmaceuticals, you can compare the effects of market volatilities on Burning Rock and Cns Pharmaceuticals 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 Cns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burning Rock and Cns Pharmaceuticals.

Diversification Opportunities for Burning Rock and Cns Pharmaceuticals

-0.54

Correlation Coefficient

Burning Rock  Cns Pharmaceuticals

Excellent diversification

The 3 months correlation between Burning and Cns is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Cns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cns Pharmaceuticals 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 Cns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cns Pharmaceuticals has no effect on the direction of Burning Rock i.e., Burning Rock and Cns Pharmaceuticals go up and down completely randomly.

Pair Corralation between Burning Rock and Cns Pharmaceuticals

Considering the 90-day investment horizon Burning Rock Biotech is expected to generate 0.8 times more return on investment than Cns Pharmaceuticals. However, Burning Rock Biotech is 1.25 times less risky than Cns Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Cns Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest  658.00  in Burning Rock Biotech on October 21, 2024 and sell it today you would lose (5.00) from holding Burning Rock Biotech or give up 0.76% of portfolio value over 90 days.

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

Burning Rock Biotech  vs.  Cns Pharmaceuticals

Burning Rock Biotech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 16 (%) 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.

Cns Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cns Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Burning Rock and Cns Pharmaceuticals

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

The idea behind Burning Rock Biotech and Cns Pharmaceuticals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.