Correlation Between Genomma Lab and BC Bud

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

By analyzing existing cross correlation between Genomma Lab Internacional and The BC Bud, you can compare the effects of market volatilities on Genomma Lab and BC Bud 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 Genomma Lab with a short position of BC Bud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genomma Lab and BC Bud.

Diversification Opportunities for Genomma Lab and BC Bud

0.84

Correlation Coefficient

Genomma Lab  BC Bud

Very poor diversification

The 3 months correlation between Genomma and BCBCF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Genomma Lab Internacional and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Genomma Lab 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 Genomma Lab Internacional are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Genomma Lab i.e., Genomma Lab and BC Bud go up and down completely randomly.

Pair Corralation between Genomma Lab and BC Bud

Assuming the 90 days horizon Genomma Lab Internacional is expected to generate 2.29 times more return on investment than BC Bud. However, Genomma Lab is 2.29 times more volatile than The BC Bud. It trades about 0.13 of its potential returns per unit of risk. The BC Bud is currently generating about 0.05 per unit of risk. If you would invest  84.00  in Genomma Lab Internacional on September 29, 2024 and sell it today you would earn a total of  43.00  from holding Genomma Lab Internacional or generate 51.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	58.15%
Values	Daily Returns

Genomma Lab Internacional  vs.  The BC Bud

Genomma Lab Internacional

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Genomma Lab Internacional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent essential indicators, Genomma Lab reported solid returns over the last few months and may actually be approaching a breakup point.

BC Bud

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, BC Bud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genomma Lab and BC Bud

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

The idea behind Genomma Lab Internacional and The BC Bud 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.