Correlation Between Laboratory and Beyond Air

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

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

Diversification Opportunities for Laboratory and Beyond Air

0.85

Correlation Coefficient

Laboratory  Beyond Air

Very poor diversification

The 3 months correlation between Laboratory and Beyond is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air and Laboratory 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 Laboratory of are associated (or correlated) with Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Laboratory i.e., Laboratory and Beyond Air go up and down completely randomly.

Pair Corralation between Laboratory and Beyond Air

Allowing for the 90-day total investment horizon Laboratory is expected to generate 12.6 times less return on investment than Beyond Air. But when comparing it to its historical volatility, Laboratory of is 6.05 times less risky than Beyond Air. It trades about 0.04 of its potential returns per unit of risk. Beyond Air is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Beyond Air on September 17, 2024 and sell it today you would earn a total of  8.00  from holding Beyond Air or generate 20.51% return on investment over 90 days.

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

Laboratory of  vs.  Beyond Air

Laboratory

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Beyond Air

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and Beyond Air

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

The idea behind Laboratory of and Beyond Air 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.