Correlation Between Berkshire Hathaway and Lifeline Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Lifeline Biotechnologies 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 Berkshire Hathaway and Lifeline Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Lifeline Biotechnologies, you can compare the effects of market volatilities on Berkshire Hathaway and Lifeline Biotechnologies 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 Berkshire Hathaway with a short position of Lifeline Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Lifeline Biotechnologies.
Diversification Opportunities for Berkshire Hathaway and Lifeline Biotechnologies
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Lifeline is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Lifeline Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeline Biotechnologies and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Lifeline Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeline Biotechnologies has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Lifeline Biotechnologies go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Lifeline Biotechnologies
Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Lifeline Biotechnologies. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 128.61 times less risky than Lifeline Biotechnologies. The stock trades about -0.33 of its potential returns per unit of risk. The Lifeline Biotechnologies is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Lifeline Biotechnologies on September 24, 2024 and sell it today you would earn a total of 0.00 from holding Lifeline Biotechnologies or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Berkshire Hathaway vs. Lifeline Biotechnologies
Performance |
Timeline |
Berkshire Hathaway |
Lifeline Biotechnologies |
Berkshire Hathaway and Lifeline Biotechnologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Berkshire Hathaway and Lifeline Biotechnologies
The main advantage of trading using opposite Berkshire Hathaway and Lifeline Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Lifeline Biotechnologies 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 Lifeline Biotechnologies will offset losses from the drop in Lifeline Biotechnologies' long position.Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
Lifeline Biotechnologies vs. Armm Inc | Lifeline Biotechnologies vs. Cellink AB | Lifeline Biotechnologies vs. Bone Biologics Corp | Lifeline Biotechnologies vs. BICO Group AB |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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