Correlation Between Vg Life and Biotron

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

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

Diversification Opportunities for Vg Life and Biotron

-0.55

Correlation Coefficient

Vg Life  Biotron

Excellent diversification

The 3 months correlation between VGLS and Biotron is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vg Life Sciences and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and Vg Life 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 Vg Life Sciences are associated (or correlated) with Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Vg Life i.e., Vg Life and Biotron go up and down completely randomly.

Pair Corralation between Vg Life and Biotron

Given the investment horizon of 90 days Vg Life Sciences is expected to generate 29.1 times more return on investment than Biotron. However, Vg Life is 29.1 times more volatile than Biotron Limited. It trades about 0.27 of its potential returns per unit of risk. Biotron Limited is currently generating about -0.1 per unit of risk. If you would invest  0.00  in Vg Life Sciences on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Vg Life Sciences or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Vg Life Sciences  vs.  Biotron Limited

Vg Life Sciences

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biotron Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biotron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vg Life and Biotron

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

The idea behind Vg Life Sciences and Biotron Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.