Correlation Between BRP and CanSino Biologics

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

By analyzing existing cross correlation between BRP Inc and CanSino Biologics, you can compare the effects of market volatilities on BRP and CanSino Biologics 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 BRP with a short position of CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and CanSino Biologics.

Diversification Opportunities for BRP and CanSino Biologics

-0.33

Correlation Coefficient

BRP  CanSino Biologics

Very good diversification

The 3 months correlation between BRP and CanSino is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and BRP 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 BRP Inc are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of BRP i.e., BRP and CanSino Biologics go up and down completely randomly.

Pair Corralation between BRP and CanSino Biologics

Given the investment horizon of 90 days BRP Inc is expected to generate 0.63 times more return on investment than CanSino Biologics. However, BRP Inc is 1.59 times less risky than CanSino Biologics. It trades about -0.11 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.19 per unit of risk. If you would invest  5,324  in BRP Inc on October 8, 2024 and sell it today you would lose (215.00) from holding BRP Inc or give up 4.04% of portfolio value over 90 days.

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

BRP Inc  vs.  CanSino Biologics

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

CanSino Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CanSino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BRP and CanSino Biologics

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

The idea behind BRP Inc and CanSino Biologics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.