Correlation Between OncoCyte Corp and Burning Rock

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

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

Diversification Opportunities for OncoCyte Corp and Burning Rock

-0.27

Correlation Coefficient

OncoCyte Corp  Burning Rock

Very good diversification

The 3 months correlation between OncoCyte and Burning is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding OncoCyte Corp 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 OncoCyte Corp 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 OncoCyte Corp 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 OncoCyte Corp i.e., OncoCyte Corp and Burning Rock go up and down completely randomly.

Pair Corralation between OncoCyte Corp and Burning Rock

Considering the 90-day investment horizon OncoCyte Corp is expected to under-perform the Burning Rock. But the stock apears to be less risky and, when comparing its historical volatility, OncoCyte Corp is 2.77 times less risky than Burning Rock. The stock trades about -0.11 of its potential returns per unit of risk. The Burning Rock Biotech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Burning Rock Biotech on August 30, 2024 and sell it today you would earn a total of  1.00  from holding Burning Rock Biotech or generate 0.19% return on investment over 90 days.

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

OncoCyte Corp  vs.  Burning Rock Biotech

OncoCyte Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OncoCyte Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Burning Rock Biotech

Risk-Adjusted Performance

3 of 100

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OncoCyte Corp and Burning Rock

The main advantage of trading using opposite OncoCyte Corp and Burning Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OncoCyte Corp 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 OncoCyte Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.