Correlation Between Burcon NutraScience and Else Nutrition

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

By analyzing existing cross correlation between Burcon NutraScience and Else Nutrition Holdings, you can compare the effects of market volatilities on Burcon NutraScience and Else Nutrition 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 Burcon NutraScience with a short position of Else Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burcon NutraScience and Else Nutrition.

Diversification Opportunities for Burcon NutraScience and Else Nutrition

0.7

Correlation Coefficient

Burcon NutraScience  Else Nutrition

Poor diversification

The 3 months correlation between Burcon and Else is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Burcon NutraScience and Else Nutrition Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Else Nutrition Holdings and Burcon NutraScience 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 Burcon NutraScience are associated (or correlated) with Else Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Else Nutrition Holdings has no effect on the direction of Burcon NutraScience i.e., Burcon NutraScience and Else Nutrition go up and down completely randomly.

Pair Corralation between Burcon NutraScience and Else Nutrition

Assuming the 90 days horizon Burcon NutraScience is expected to generate 0.65 times more return on investment than Else Nutrition. However, Burcon NutraScience is 1.54 times less risky than Else Nutrition. It trades about -0.03 of its potential returns per unit of risk. Else Nutrition Holdings is currently generating about -0.08 per unit of risk. If you would invest  21.00  in Burcon NutraScience on October 12, 2024 and sell it today you would lose (12.00) from holding Burcon NutraScience or give up 57.14% of portfolio value over 90 days.

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

Burcon NutraScience  vs.  Else Nutrition Holdings

Burcon NutraScience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burcon NutraScience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Burcon NutraScience is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Else Nutrition Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Else Nutrition Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Burcon NutraScience and Else Nutrition

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

The idea behind Burcon NutraScience and Else Nutrition Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.