Correlation Between Burning Rock and Neogen

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

Diversification Opportunities for Burning Rock and Neogen

-0.39

Correlation Coefficient

Burning Rock  Neogen

Very good diversification

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

Pair Corralation between Burning Rock and Neogen

Considering the 90-day investment horizon Burning Rock Biotech is expected to generate 1.94 times more return on investment than Neogen. However, Burning Rock is 1.94 times more volatile than Neogen. It trades about 0.04 of its potential returns per unit of risk. Neogen is currently generating about -0.19 per unit of risk. If you would invest  604.00  in Burning Rock Biotech on December 2, 2024 and sell it today you would earn a total of  27.00  from holding Burning Rock Biotech or generate 4.47% 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.  Neogen

Burning Rock Biotech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Neogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Burning Rock and Neogen

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

The idea behind Burning Rock Biotech and Neogen 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.