Correlation Between Hilan and BioLight Life

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

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

Diversification Opportunities for Hilan and BioLight Life

0.51

Correlation Coefficient

Hilan  BioLight Life

Very weak diversification

The 3 months correlation between Hilan and BioLight is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hilan and BioLight Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLight Life Sciences and Hilan 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 Hilan are associated (or correlated) with BioLight Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLight Life Sciences has no effect on the direction of Hilan i.e., Hilan and BioLight Life go up and down completely randomly.

Pair Corralation between Hilan and BioLight Life

Assuming the 90 days trading horizon Hilan is expected to generate 0.43 times more return on investment than BioLight Life. However, Hilan is 2.33 times less risky than BioLight Life. It trades about 0.05 of its potential returns per unit of risk. BioLight Life Sciences is currently generating about 0.01 per unit of risk. If you would invest  1,654,175  in Hilan on October 11, 2024 and sell it today you would earn a total of  591,825  from holding Hilan or generate 35.78% return on investment over 90 days.

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

Hilan  vs.  BioLight Life Sciences

Hilan

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hilan are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilan sustained solid returns over the last few months and may actually be approaching a breakup point.

BioLight Life Sciences

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioLight Life Sciences are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BioLight Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hilan and BioLight Life

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

The idea behind Hilan and BioLight Life Sciences 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.