Correlation Between Rapid Micro and Bioventus

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

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

Diversification Opportunities for Rapid Micro and Bioventus

0.0

Correlation Coefficient

Rapid Micro  Bioventus

Pay attention - limited upside

The 3 months correlation between Rapid and Bioventus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and Bioventus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventus and Rapid Micro 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 Rapid Micro Biosystems are associated (or correlated) with Bioventus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventus has no effect on the direction of Rapid Micro i.e., Rapid Micro and Bioventus go up and down completely randomly.

Pair Corralation between Rapid Micro and Bioventus

Given the investment horizon of 90 days Rapid Micro is expected to generate 21.51 times less return on investment than Bioventus. But when comparing it to its historical volatility, Rapid Micro Biosystems is 1.42 times less risky than Bioventus. It trades about 0.01 of its potential returns per unit of risk. Bioventus is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Bioventus on October 7, 2024 and sell it today you would earn a total of  804.00  from holding Bioventus or generate 335.0% return on investment over 90 days.

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

Rapid Micro Biosystems  vs.  Bioventus

Rapid Micro Biosystems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bioventus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioventus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bioventus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rapid Micro and Bioventus

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

The idea behind Rapid Micro Biosystems and Bioventus 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..