Correlation Between Core Lithium and Bio Gene

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

By analyzing existing cross correlation between Core Lithium and Bio Gene Technology, you can compare the effects of market volatilities on Core Lithium and Bio Gene 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 Core Lithium with a short position of Bio Gene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Bio Gene.

Diversification Opportunities for Core Lithium and Bio Gene

0.75

Correlation Coefficient

Core Lithium  Bio Gene

Poor diversification

The 3 months correlation between Core and Bio is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Bio Gene Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Gene Technology and Core Lithium 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 Core Lithium are associated (or correlated) with Bio Gene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Gene Technology has no effect on the direction of Core Lithium i.e., Core Lithium and Bio Gene go up and down completely randomly.

Pair Corralation between Core Lithium and Bio Gene

Assuming the 90 days trading horizon Core Lithium is expected to under-perform the Bio Gene. But the stock apears to be less risky and, when comparing its historical volatility, Core Lithium is 1.27 times less risky than Bio Gene. The stock trades about -0.18 of its potential returns per unit of risk. The Bio Gene Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Bio Gene Technology on September 18, 2024 and sell it today you would lose (0.20) from holding Bio Gene Technology or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Core Lithium  vs.  Bio Gene Technology

Core Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bio Gene Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Gene Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Core Lithium and Bio Gene

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

The idea behind Core Lithium and Bio Gene Technology 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 CEOs Directory module to screen CEOs from public companies around the world.