Correlation Between Bio Techne and Liquidia Technologies

Can any of the company-specific risk be diversified away by investing in both Bio Techne and Liquidia 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 Bio Techne and Liquidia Technologies 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 Liquidia Technologies, you can compare the effects of market volatilities on Bio Techne and Liquidia 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 Bio Techne with a short position of Liquidia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Techne and Liquidia Technologies.

Diversification Opportunities for Bio Techne and Liquidia Technologies

-0.05

Correlation Coefficient

Bio Techne  Liquidia Technologies

Good diversification

The 3 months correlation between Bio and Liquidia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and Liquidia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidia Technologies 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 Liquidia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidia Technologies has no effect on the direction of Bio Techne i.e., Bio Techne and Liquidia Technologies go up and down completely randomly.

Pair Corralation between Bio Techne and Liquidia Technologies

Given the investment horizon of 90 days Bio Techne is expected to generate 3.02 times less return on investment than Liquidia Technologies. But when comparing it to its historical volatility, Bio Techne Corp is 1.29 times less risky than Liquidia Technologies. It trades about 0.06 of its potential returns per unit of risk. Liquidia Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  894.00  in Liquidia Technologies on September 4, 2024 and sell it today you would earn a total of  229.00  from holding Liquidia Technologies or generate 25.62% return on investment over 90 days.

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

Bio Techne Corp  vs.  Liquidia Technologies

Bio Techne Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Bio Techne may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Liquidia Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liquidia Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Liquidia Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bio Techne and Liquidia Technologies

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

The idea behind Bio Techne Corp and Liquidia 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.