Correlation Between BioRem and Vitreous Glass

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

By analyzing existing cross correlation between BioRem Inc and Vitreous Glass, you can compare the effects of market volatilities on BioRem and Vitreous Glass 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 Vitreous Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioRem and Vitreous Glass.

Diversification Opportunities for BioRem and Vitreous Glass

0.3

Correlation Coefficient

BioRem  Vitreous Glass

Weak diversification

The 3 months correlation between BioRem and Vitreous is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BioRem Inc and Vitreous Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitreous Glass 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 Vitreous Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitreous Glass has no effect on the direction of BioRem i.e., BioRem and Vitreous Glass go up and down completely randomly.

Pair Corralation between BioRem and Vitreous Glass

Assuming the 90 days horizon BioRem Inc is expected to generate 2.45 times more return on investment than Vitreous Glass. However, BioRem is 2.45 times more volatile than Vitreous Glass. It trades about 0.15 of its potential returns per unit of risk. Vitreous Glass is currently generating about -0.01 per unit of risk. If you would invest  239.00  in BioRem Inc on September 13, 2024 and sell it today you would earn a total of  77.00  from holding BioRem Inc or generate 32.22% return on investment over 90 days.

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

BioRem Inc  vs.  Vitreous Glass

BioRem Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioRem Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, BioRem showed solid returns over the last few months and may actually be approaching a breakup point.

Vitreous Glass

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vitreous Glass has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vitreous Glass is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BioRem and Vitreous Glass

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

The idea behind BioRem Inc and Vitreous Glass 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.