Correlation Between Concord Medical and BioLife Solutions

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

By analyzing existing cross correlation between Concord Medical Services and BioLife Solutions, you can compare the effects of market volatilities on Concord Medical and BioLife Solutions 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 Concord Medical with a short position of BioLife Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Medical and BioLife Solutions.

Diversification Opportunities for Concord Medical and BioLife Solutions

0.02

Correlation Coefficient

Concord Medical  BioLife Solutions

Significant diversification

The 3 months correlation between Concord and BioLife is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services and BioLife Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLife Solutions and Concord Medical 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 Concord Medical Services are associated (or correlated) with BioLife Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLife Solutions has no effect on the direction of Concord Medical i.e., Concord Medical and BioLife Solutions go up and down completely randomly.

Pair Corralation between Concord Medical and BioLife Solutions

Considering the 90-day investment horizon Concord Medical Services is expected to under-perform the BioLife Solutions. In addition to that, Concord Medical is 2.94 times more volatile than BioLife Solutions. It trades about -0.01 of its total potential returns per unit of risk. BioLife Solutions is currently generating about 0.0 per unit of volatility. If you would invest  2,627  in BioLife Solutions on December 28, 2024 and sell it today you would lose (59.50) from holding BioLife Solutions or give up 2.26% of portfolio value over 90 days.

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

Concord Medical Services  vs.  BioLife Solutions

Concord Medical Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

BioLife Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLife Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BioLife Solutions is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Concord Medical and BioLife Solutions

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

The idea behind Concord Medical Services and BioLife Solutions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.