Correlation Between Virax Biolabs and Illumina

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

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

Diversification Opportunities for Virax Biolabs and Illumina

0.16

Correlation Coefficient

Virax Biolabs  Illumina

Average diversification

The 3 months correlation between Virax and Illumina is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Virax Biolabs Group and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and Virax Biolabs 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 Virax Biolabs Group are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Virax Biolabs i.e., Virax Biolabs and Illumina go up and down completely randomly.

Pair Corralation between Virax Biolabs and Illumina

Given the investment horizon of 90 days Virax Biolabs Group is expected to generate 3.51 times more return on investment than Illumina. However, Virax Biolabs is 3.51 times more volatile than Illumina. It trades about 0.04 of its potential returns per unit of risk. Illumina is currently generating about -0.17 per unit of risk. If you would invest  192.00  in Virax Biolabs Group on November 19, 2024 and sell it today you would lose (1.60) from holding Virax Biolabs Group or give up 0.83% of portfolio value over 90 days.

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

Virax Biolabs Group  vs.  Illumina

Virax Biolabs Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Illumina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Illumina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Virax Biolabs and Illumina

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

The idea behind Virax Biolabs Group and Illumina 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.