Correlation Between Spuntech and Bio View

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

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

Diversification Opportunities for Spuntech and Bio View

-0.08

Correlation Coefficient

Spuntech  Bio View

Good diversification

The 3 months correlation between Spuntech and Bio is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spuntech and Bio View in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio View and Spuntech 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 Spuntech are associated (or correlated) with Bio View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio View has no effect on the direction of Spuntech i.e., Spuntech and Bio View go up and down completely randomly.

Pair Corralation between Spuntech and Bio View

Assuming the 90 days trading horizon Spuntech is expected to under-perform the Bio View. But the stock apears to be less risky and, when comparing its historical volatility, Spuntech is 1.17 times less risky than Bio View. The stock trades about -0.05 of its potential returns per unit of risk. The Bio View is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,930  in Bio View on December 21, 2024 and sell it today you would earn a total of  270.00  from holding Bio View or generate 9.22% return on investment over 90 days.

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

Spuntech  vs.  Bio View

Spuntech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spuntech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Bio View

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio View are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bio View sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spuntech and Bio View

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

The idea behind Spuntech and Bio View 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.