Correlation Between Geron and Biotron

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

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

Diversification Opportunities for Geron and Biotron

0.33

Correlation Coefficient

Geron  Biotron

Weak diversification

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

Pair Corralation between Geron and Biotron

Given the investment horizon of 90 days Geron is expected to under-perform the Biotron. But the stock apears to be less risky and, when comparing its historical volatility, Geron is 7.58 times less risky than Biotron. The stock trades about -0.19 of its potential returns per unit of risk. The Biotron Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.98  in Biotron Limited on December 29, 2024 and sell it today you would lose (0.71) from holding Biotron Limited or give up 72.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Geron  vs.  Biotron Limited

Geron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Biotron Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Biotron Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Biotron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Geron and Biotron

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

The idea behind Geron and Biotron Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.