Correlation Between Bright Minds and Sotera Health

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

By analyzing existing cross correlation between Bright Minds Biosciences and Sotera Health Co, you can compare the effects of market volatilities on Bright Minds and Sotera Health 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 Bright Minds with a short position of Sotera Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Minds and Sotera Health.

Diversification Opportunities for Bright Minds and Sotera Health

-0.08

Correlation Coefficient

Bright Minds  Sotera Health

Good diversification

The 3 months correlation between Bright and Sotera is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bright Minds Biosciences and Sotera Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotera Health and Bright Minds 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 Bright Minds Biosciences are associated (or correlated) with Sotera Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotera Health has no effect on the direction of Bright Minds i.e., Bright Minds and Sotera Health go up and down completely randomly.

Pair Corralation between Bright Minds and Sotera Health

Given the investment horizon of 90 days Bright Minds Biosciences is expected to under-perform the Sotera Health. In addition to that, Bright Minds is 3.48 times more volatile than Sotera Health Co. It trades about -0.07 of its total potential returns per unit of risk. Sotera Health Co is currently generating about 0.06 per unit of volatility. If you would invest  1,317  in Sotera Health Co on November 28, 2024 and sell it today you would earn a total of  56.00  from holding Sotera Health Co or generate 4.25% return on investment over 90 days.

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

Bright Minds Biosciences  vs.  Sotera Health Co

Bright Minds Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bright Minds Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sotera Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sotera Health Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Sotera Health is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bright Minds and Sotera Health

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

The idea behind Bright Minds Biosciences and Sotera Health Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.