Correlation Between Beyond Air and Biomerica

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

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

Diversification Opportunities for Beyond Air and Biomerica

-0.38

Correlation Coefficient

Beyond Air  Biomerica

Very good diversification

The 3 months correlation between Beyond and Biomerica is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and Beyond Air 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 Beyond Air are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of Beyond Air i.e., Beyond Air and Biomerica go up and down completely randomly.

Pair Corralation between Beyond Air and Biomerica

Given the investment horizon of 90 days Beyond Air is expected to under-perform the Biomerica. But the stock apears to be less risky and, when comparing its historical volatility, Beyond Air is 3.6 times less risky than Biomerica. The stock trades about -0.04 of its potential returns per unit of risk. The Biomerica is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Biomerica on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Biomerica or generate 133.33% return on investment over 90 days.

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

Beyond Air  vs.  Biomerica

Beyond Air

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

Biomerica

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Beyond Air and Biomerica

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

The idea behind Beyond Air and Biomerica 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.