Correlation Between Pool and Bionoid Pharma

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

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

Diversification Opportunities for Pool and Bionoid Pharma

0.27

Correlation Coefficient

Pool  Bionoid Pharma

Modest diversification

The 3 months correlation between Pool and Bionoid is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Bionoid Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionoid Pharma and Pool 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 Pool Corporation are associated (or correlated) with Bionoid Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionoid Pharma has no effect on the direction of Pool i.e., Pool and Bionoid Pharma go up and down completely randomly.

Pair Corralation between Pool and Bionoid Pharma

Given the investment horizon of 90 days Pool Corporation is expected to generate 0.11 times more return on investment than Bionoid Pharma. However, Pool Corporation is 9.38 times less risky than Bionoid Pharma. It trades about -0.07 of its potential returns per unit of risk. Bionoid Pharma is currently generating about -0.07 per unit of risk. If you would invest  34,663  in Pool Corporation on December 21, 2024 and sell it today you would lose (2,649) from holding Pool Corporation or give up 7.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Pool Corp.  vs.  Bionoid Pharma

Pool

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bionoid Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bionoid Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Pool and Bionoid Pharma

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

The idea behind Pool Corporation and Bionoid Pharma 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.