Correlation Between Burning Rock and Intelligent Bio

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

Diversification Opportunities for Burning Rock and Intelligent Bio

-0.01

Correlation Coefficient

Burning Rock  Intelligent Bio

Good diversification

The 3 months correlation between Burning and Intelligent is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Intelligent Bio Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Bio Solutions 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 Intelligent Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Bio Solutions has no effect on the direction of Burning Rock i.e., Burning Rock and Intelligent Bio go up and down completely randomly.

Pair Corralation between Burning Rock and Intelligent Bio

Considering the 90-day investment horizon Burning Rock is expected to generate 1.27 times less return on investment than Intelligent Bio. In addition to that, Burning Rock is 1.28 times more volatile than Intelligent Bio Solutions. It trades about 0.13 of its total potential returns per unit of risk. Intelligent Bio Solutions is currently generating about 0.21 per unit of volatility. If you would invest  138.00  in Intelligent Bio Solutions on November 19, 2024 and sell it today you would earn a total of  117.00  from holding Intelligent Bio Solutions or generate 84.78% return on investment over 90 days.

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

Burning Rock Biotech  vs.  Intelligent Bio Solutions

Burning Rock Biotech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 10 (%) 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.

Intelligent Bio Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intelligent Bio Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Intelligent Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burning Rock and Intelligent Bio

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

The idea behind Burning Rock Biotech and Intelligent Bio Solutions 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.