Correlation Between Regeneron Pharmaceuticals and Biostem Technologies

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Biostem Technologies

-0.56

Correlation Coefficient

Regeneron Pharmaceuticals  Biostem Technologies

Excellent diversification

The 3 months correlation between Regeneron and Biostem is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Biostem Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostem Technologies and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals are associated (or correlated) with Biostem Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostem Technologies has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Biostem Technologies go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Biostem Technologies

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Biostem Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 4.25 times less risky than Biostem Technologies. The stock trades about -0.34 of its potential returns per unit of risk. The Biostem Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,395  in Biostem Technologies on September 23, 2024 and sell it today you would earn a total of  49.00  from holding Biostem Technologies or generate 3.51% return on investment over 90 days.

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

Regeneron Pharmaceuticals  vs.  Biostem Technologies

Regeneron Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regeneron Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Biostem Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biostem Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Biostem Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regeneron Pharmaceuticals and Biostem Technologies

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

The idea behind Regeneron Pharmaceuticals and Biostem Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.