Correlation Between Bonus Biogroup and BioLine RX

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

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

Diversification Opportunities for Bonus Biogroup and BioLine RX

0.93

Correlation Coefficient

Bonus Biogroup  BioLine RX

Almost no diversification

The 3 months correlation between Bonus and BioLine is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bonus Biogroup and BioLine RX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLine RX and Bonus Biogroup 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 Bonus Biogroup are associated (or correlated) with BioLine RX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLine RX has no effect on the direction of Bonus Biogroup i.e., Bonus Biogroup and BioLine RX go up and down completely randomly.

Pair Corralation between Bonus Biogroup and BioLine RX

Assuming the 90 days trading horizon Bonus Biogroup is expected to generate 0.18 times more return on investment than BioLine RX. However, Bonus Biogroup is 5.68 times less risky than BioLine RX. It trades about -0.27 of its potential returns per unit of risk. BioLine RX is currently generating about -0.25 per unit of risk. If you would invest  1,170  in Bonus Biogroup on September 12, 2024 and sell it today you would lose (90.00) from holding Bonus Biogroup or give up 7.69% of portfolio value over 90 days.

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

Bonus Biogroup  vs.  BioLine RX

Bonus Biogroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonus Biogroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BioLine RX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLine RX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bonus Biogroup and BioLine RX

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

The idea behind Bonus Biogroup and BioLine RX 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.