Correlation Between HLS Therapeutics and BC Bud

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

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

Diversification Opportunities for HLS Therapeutics and BC Bud

-0.47

Correlation Coefficient

HLS Therapeutics  BC Bud

Very good diversification

The 3 months correlation between HLS and BCBCF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HLS Therapeutics and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and HLS Therapeutics 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 HLS Therapeutics 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 HLS Therapeutics i.e., HLS Therapeutics and BC Bud go up and down completely randomly.

Pair Corralation between HLS Therapeutics and BC Bud

Assuming the 90 days horizon HLS Therapeutics is expected to generate 0.28 times more return on investment than BC Bud. However, HLS Therapeutics is 3.51 times less risky than BC Bud. It trades about 0.1 of its potential returns per unit of risk. The BC Bud is currently generating about -0.01 per unit of risk. If you would invest  269.00  in HLS Therapeutics on December 27, 2024 and sell it today you would earn a total of  51.00  from holding HLS Therapeutics or generate 18.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

HLS Therapeutics  vs.  The BC Bud

HLS Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HLS Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

BC Bud

Risk-Adjusted Performance

Very Weak

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

Pair Trading with HLS Therapeutics and BC Bud

The main advantage of trading using opposite HLS Therapeutics and BC Bud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HLS Therapeutics 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 HLS Therapeutics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.