Correlation Between Health Sciences and Biostage

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

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

Diversification Opportunities for Health Sciences and Biostage

0.0

Correlation Coefficient

Health Sciences  Biostage

Pay attention - limited upside

The 3 months correlation between Health and Biostage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Sciences Gr and Biostage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostage and Health Sciences 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 Health Sciences Gr are associated (or correlated) with Biostage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostage has no effect on the direction of Health Sciences i.e., Health Sciences and Biostage go up and down completely randomly.

Pair Corralation between Health Sciences and Biostage

If you would invest (100.00) in Biostage on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Biostage or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Health Sciences Gr  vs.  Biostage

Health Sciences Gr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Sciences Gr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Health Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Biostage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Health Sciences and Biostage

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

The idea behind Health Sciences Gr and Biostage 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.