Correlation Between Imed Infinity and BioLight Life

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

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

Diversification Opportunities for Imed Infinity and BioLight Life

-0.36

Correlation Coefficient

Imed Infinity  BioLight Life

Very good diversification

The 3 months correlation between Imed and BioLight is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Imed Infinity Medical Limited 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 Imed Infinity 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 Imed Infinity Medical Limited 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 Imed Infinity i.e., Imed Infinity and BioLight Life go up and down completely randomly.

Pair Corralation between Imed Infinity and BioLight Life

Assuming the 90 days trading horizon Imed Infinity is expected to generate 4.89 times less return on investment than BioLight Life. But when comparing it to its historical volatility, Imed Infinity Medical Limited is 1.44 times less risky than BioLight Life. It trades about 0.11 of its potential returns per unit of risk. BioLight Life Sciences is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  50,000  in BioLight Life Sciences on October 9, 2024 and sell it today you would earn a total of  15,000  from holding BioLight Life Sciences or generate 30.0% return on investment over 90 days.

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

Imed Infinity Medical Limited  vs.  BioLight Life Sciences

Imed Infinity Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Imed Infinity Medical Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Imed Infinity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BioLight Life Sciences

Risk-Adjusted Performance

10 of 100

Good

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 Imed Infinity and BioLight Life

The main advantage of trading using opposite Imed Infinity and BioLight Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imed Infinity 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 Imed Infinity Medical Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.