Correlation Between BioRem and Current Water

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

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

Diversification Opportunities for BioRem and Current Water

-0.39

Correlation Coefficient

BioRem  Current Water

Very good diversification

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

Pair Corralation between BioRem and Current Water

Assuming the 90 days horizon BioRem Inc is expected to generate 0.25 times more return on investment than Current Water. However, BioRem Inc is 4.06 times less risky than Current Water. It trades about 0.14 of its potential returns per unit of risk. Current Water Technologies is currently generating about 0.02 per unit of risk. If you would invest  244.00  in BioRem Inc on September 12, 2024 and sell it today you would earn a total of  72.00  from holding BioRem Inc or generate 29.51% return on investment over 90 days.

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

BioRem Inc  vs.  Current Water Technologies

BioRem Inc

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioRem Inc are ranked lower than 10 (%) 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.

Current Water Techno

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Current Water Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Current Water showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioRem and Current Water

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

The idea behind BioRem Inc and Current Water Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.