Correlation Between Bio Techne and Telkom SA

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

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

Diversification Opportunities for Bio Techne and Telkom SA

0.58

Correlation Coefficient

Bio Techne  Telkom SA

Very weak diversification

The 3 months correlation between Bio and Telkom is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and Telkom SA SOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom SA SOC and Bio Techne 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 Bio Techne Corp are associated (or correlated) with Telkom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom SA SOC has no effect on the direction of Bio Techne i.e., Bio Techne and Telkom SA go up and down completely randomly.

Pair Corralation between Bio Techne and Telkom SA

Assuming the 90 days trading horizon Bio Techne is expected to generate 1.19 times less return on investment than Telkom SA. But when comparing it to its historical volatility, Bio Techne Corp is 1.13 times less risky than Telkom SA. It trades about 0.16 of its potential returns per unit of risk. Telkom SA SOC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Telkom SA SOC on October 25, 2024 and sell it today you would earn a total of  32.00  from holding Telkom SA SOC or generate 24.06% return on investment over 90 days.

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

Bio Techne Corp  vs.  Telkom SA SOC

Bio Techne Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bio Techne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Telkom SA SOC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom SA SOC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Telkom SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bio Techne and Telkom SA

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

The idea behind Bio Techne Corp and Telkom SA SOC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.