Correlation Between Penumbra and Bio Rad

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

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

Diversification Opportunities for Penumbra and Bio Rad

0.41

Correlation Coefficient

Penumbra  Bio Rad

Very weak diversification

The 3 months correlation between Penumbra and Bio is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Bio Rad Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Rad Laboratories and Penumbra 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 Penumbra are associated (or correlated) with Bio Rad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Rad Laboratories has no effect on the direction of Penumbra i.e., Penumbra and Bio Rad go up and down completely randomly.

Pair Corralation between Penumbra and Bio Rad

Considering the 90-day investment horizon Penumbra is expected to under-perform the Bio Rad. In addition to that, Penumbra is 1.31 times more volatile than Bio Rad Laboratories. It trades about -0.01 of its total potential returns per unit of risk. Bio Rad Laboratories is currently generating about 0.0 per unit of volatility. If you would invest  35,949  in Bio Rad Laboratories on August 31, 2024 and sell it today you would lose (1,896) from holding Bio Rad Laboratories or give up 5.27% of portfolio value over 90 days.

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

Penumbra  vs.  Bio Rad Laboratories

Penumbra

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Penumbra displayed solid returns over the last few months and may actually be approaching a breakup point.

Bio Rad Laboratories

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Rad Laboratories are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Bio Rad is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Penumbra and Bio Rad

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

The idea behind Penumbra and Bio Rad Laboratories 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.