Correlation Between Technical Olympic and Bioter SA

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

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

Diversification Opportunities for Technical Olympic and Bioter SA

0.17

Correlation Coefficient

Technical Olympic  Bioter SA

Average diversification

The 3 months correlation between Technical and Bioter is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Technical Olympic SA and Bioter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioter SA and Technical Olympic 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 Technical Olympic SA are associated (or correlated) with Bioter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioter SA has no effect on the direction of Technical Olympic i.e., Technical Olympic and Bioter SA go up and down completely randomly.

Pair Corralation between Technical Olympic and Bioter SA

Assuming the 90 days trading horizon Technical Olympic SA is expected to generate 0.27 times more return on investment than Bioter SA. However, Technical Olympic SA is 3.69 times less risky than Bioter SA. It trades about 0.07 of its potential returns per unit of risk. Bioter SA is currently generating about -0.03 per unit of risk. If you would invest  235.00  in Technical Olympic SA on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Technical Olympic SA or generate 4.26% return on investment over 90 days.

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

Technical Olympic SA  vs.  Bioter SA

Technical Olympic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technical Olympic SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Technical Olympic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bioter SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bioter SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Technical Olympic and Bioter SA

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

The idea behind Technical Olympic SA and Bioter SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.