Correlation Between Wearable Health and BioLife Sciences

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

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

Diversification Opportunities for Wearable Health and BioLife Sciences

1.0

Correlation Coefficient

Wearable Health  BioLife Sciences

No risk reduction

The 3 months correlation between Wearable and BioLife is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Health Solutions and BioLife Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLife Sciences and Wearable Health 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 Wearable Health Solutions are associated (or correlated) with BioLife Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLife Sciences has no effect on the direction of Wearable Health i.e., Wearable Health and BioLife Sciences go up and down completely randomly.

Pair Corralation between Wearable Health and BioLife Sciences

If you would invest  0.01  in BioLife Sciences on December 29, 2024 and sell it today you would earn a total of  0.00  from holding BioLife Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.31%
Values	Daily Returns

Wearable Health Solutions  vs.  BioLife Sciences

Wearable Health Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wearable Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wearable Health is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

BioLife Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLife Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BioLife Sciences is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wearable Health and BioLife Sciences

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

The idea behind Wearable Health Solutions and BioLife Sciences 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.