Correlation Between BioRem and Thermal Energy

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

By analyzing existing cross correlation between BioRem Inc and Thermal Energy International, you can compare the effects of market volatilities on BioRem and Thermal Energy 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 BioRem with a short position of Thermal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioRem and Thermal Energy.

Diversification Opportunities for BioRem and Thermal Energy

-0.47

Correlation Coefficient

BioRem  Thermal Energy

Very good diversification

The 3 months correlation between BioRem and Thermal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BioRem Inc and Thermal Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermal Energy Inter and BioRem 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 BioRem Inc are associated (or correlated) with Thermal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermal Energy Inter has no effect on the direction of BioRem i.e., BioRem and Thermal Energy go up and down completely randomly.

Pair Corralation between BioRem and Thermal Energy

Assuming the 90 days horizon BioRem Inc is expected to generate 0.69 times more return on investment than Thermal Energy. However, BioRem Inc is 1.45 times less risky than Thermal Energy. It trades about 0.09 of its potential returns per unit of risk. Thermal Energy International is currently generating about 0.05 per unit of risk. If you would invest  85.00  in BioRem Inc on September 3, 2024 and sell it today you would earn a total of  215.00  from holding BioRem Inc or generate 252.94% return on investment over 90 days.

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

BioRem Inc  vs.  Thermal Energy International

BioRem Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioRem Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, BioRem showed solid returns over the last few months and may actually be approaching a breakup point.

Thermal Energy Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermal Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with BioRem and Thermal Energy

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

The idea behind BioRem Inc and Thermal Energy International 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.