Correlation Between BRP and COSCIENS Biopharma

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

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

Diversification Opportunities for BRP and COSCIENS Biopharma

0.59

Correlation Coefficient

BRP  COSCIENS Biopharma

Very weak diversification

The 3 months correlation between BRP and COSCIENS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and COSCIENS Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCIENS Biopharma 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 COSCIENS Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCIENS Biopharma has no effect on the direction of BRP i.e., BRP and COSCIENS Biopharma go up and down completely randomly.

Pair Corralation between BRP and COSCIENS Biopharma

Given the investment horizon of 90 days BRP Inc is expected to generate 0.51 times more return on investment than COSCIENS Biopharma. However, BRP Inc is 1.95 times less risky than COSCIENS Biopharma. It trades about -0.03 of its potential returns per unit of risk. COSCIENS Biopharma is currently generating about -0.06 per unit of risk. If you would invest  7,833  in BRP Inc on October 4, 2024 and sell it today you would lose (2,818) from holding BRP Inc or give up 35.98% of portfolio value over 90 days.

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

BRP Inc  vs.  COSCIENS Biopharma

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 inconsistent 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.

COSCIENS Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSCIENS Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with BRP and COSCIENS Biopharma

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

The idea behind BRP Inc and COSCIENS Biopharma 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.