Correlation Between LIFE Old and BiOasis Technologies

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

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

Diversification Opportunities for LIFE Old and BiOasis Technologies

-0.9

Correlation Coefficient

LIFE Old  BiOasis Technologies

Pay attention - limited upside

The 3 months correlation between LIFE and BiOasis is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding LIFE Old and biOasis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biOasis Technologies and LIFE Old 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 LIFE Old are associated (or correlated) with BiOasis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biOasis Technologies has no effect on the direction of LIFE Old i.e., LIFE Old and BiOasis Technologies go up and down completely randomly.

Pair Corralation between LIFE Old and BiOasis Technologies

Given the investment horizon of 90 days LIFE Old is expected to under-perform the BiOasis Technologies. But the stock apears to be less risky and, when comparing its historical volatility, LIFE Old is 3.67 times less risky than BiOasis Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The biOasis Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.10  in biOasis Technologies on October 11, 2024 and sell it today you would lose (3.08) from holding biOasis Technologies or give up 99.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	70.56%
Values	Daily Returns

LIFE Old  vs.  biOasis Technologies

LIFE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, LIFE Old is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

biOasis Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in biOasis Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BiOasis Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIFE Old and BiOasis Technologies

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

The idea behind LIFE Old and biOasis Technologies 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.