Correlation Between InnovAge Holding and Biote Corp

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

By analyzing existing cross correlation between InnovAge Holding Corp and biote Corp, you can compare the effects of market volatilities on InnovAge Holding and Biote Corp 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 InnovAge Holding with a short position of Biote Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and Biote Corp.

Diversification Opportunities for InnovAge Holding and Biote Corp

-0.65

Correlation Coefficient

InnovAge Holding  Biote Corp

Excellent diversification

The 3 months correlation between InnovAge and Biote is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and biote Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biote Corp and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Biote Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biote Corp has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Biote Corp go up and down completely randomly.

Pair Corralation between InnovAge Holding and Biote Corp

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Biote Corp. But the stock apears to be less risky and, when comparing its historical volatility, InnovAge Holding Corp is 1.26 times less risky than Biote Corp. The stock trades about -0.04 of its potential returns per unit of risk. The biote Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  780.00  in biote Corp on October 7, 2024 and sell it today you would lose (160.00) from holding biote Corp or give up 20.51% of portfolio value over 90 days.

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

InnovAge Holding Corp  vs.  biote Corp

InnovAge Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InnovAge Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

biote Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in biote Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Biote Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InnovAge Holding and Biote Corp

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

The idea behind InnovAge Holding Corp and biote Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.