Correlation Between Creo Medical and Biome Technologies

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

By analyzing existing cross correlation between Creo Medical Group and Biome Technologies Plc, you can compare the effects of market volatilities on Creo Medical and Biome Technologies 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 Creo Medical with a short position of Biome Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and Biome Technologies.

Diversification Opportunities for Creo Medical and Biome Technologies

0.82

Correlation Coefficient

Creo Medical  Biome Technologies

Very poor diversification

The 3 months correlation between Creo and Biome is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Biome Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biome Technologies Plc and Creo 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 Creo Medical Group are associated (or correlated) with Biome Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biome Technologies Plc has no effect on the direction of Creo Medical i.e., Creo Medical and Biome Technologies go up and down completely randomly.

Pair Corralation between Creo Medical and Biome Technologies

Assuming the 90 days trading horizon Creo Medical Group is expected to generate 1.24 times more return on investment than Biome Technologies. However, Creo Medical is 1.24 times more volatile than Biome Technologies Plc. It trades about 0.03 of its potential returns per unit of risk. Biome Technologies Plc is currently generating about -0.22 per unit of risk. If you would invest  1,675  in Creo Medical Group on September 17, 2024 and sell it today you would earn a total of  13.00  from holding Creo Medical Group or generate 0.78% return on investment over 90 days.

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

Creo Medical Group  vs.  Biome Technologies Plc

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Biome Technologies Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biome Technologies Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Creo Medical and Biome Technologies

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

The idea behind Creo Medical Group and Biome Technologies Plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.