Correlation Between Neogen and Burning Rock

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

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

Diversification Opportunities for Neogen and Burning Rock

-0.39

Correlation Coefficient

Neogen  Burning Rock

Very good diversification

The 3 months correlation between Neogen and Burning is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Burning Rock Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burning Rock Biotech and Neogen 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 Neogen are associated (or correlated) with Burning Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burning Rock Biotech has no effect on the direction of Neogen i.e., Neogen and Burning Rock go up and down completely randomly.

Pair Corralation between Neogen and Burning Rock

Given the investment horizon of 90 days Neogen is expected to under-perform the Burning Rock. But the stock apears to be less risky and, when comparing its historical volatility, Neogen is 2.02 times less risky than Burning Rock. The stock trades about -0.05 of its potential returns per unit of risk. The Burning Rock Biotech is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Burning Rock Biotech on December 2, 2024 and sell it today you would lose (459.00) from holding Burning Rock Biotech or give up 42.11% of portfolio value over 90 days.

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

Neogen  vs.  Burning Rock Biotech

Neogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Burning Rock Biotech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Neogen and Burning Rock

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

The idea behind Neogen and Burning Rock Biotech 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.