Correlation Between Burning Rock and Fonar

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

Diversification Opportunities for Burning Rock and Fonar

0.54

Correlation Coefficient

Burning Rock  Fonar

Very weak diversification

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

Pair Corralation between Burning Rock and Fonar

Considering the 90-day investment horizon Burning Rock Biotech is expected to under-perform the Fonar. In addition to that, Burning Rock is 2.92 times more volatile than Fonar. It trades about -0.1 of its total potential returns per unit of risk. Fonar is currently generating about -0.06 per unit of volatility. If you would invest  1,498  in Fonar on December 28, 2024 and sell it today you would lose (108.00) from holding Fonar or give up 7.21% of portfolio value over 90 days.

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

Burning Rock Biotech  vs.  Fonar

Burning Rock Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burning Rock Biotech 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fonar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Burning Rock and Fonar

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

The idea behind Burning Rock Biotech and Fonar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.