Correlation Between BRIM Biotechnology and Onyx Healthcare
Can any of the company-specific risk be diversified away by investing in both BRIM Biotechnology and Onyx Healthcare 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 BRIM Biotechnology and Onyx Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIM Biotechnology and Onyx Healthcare, you can compare the effects of market volatilities on BRIM Biotechnology and Onyx Healthcare 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 BRIM Biotechnology with a short position of Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIM Biotechnology and Onyx Healthcare.
Diversification Opportunities for BRIM Biotechnology and Onyx Healthcare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIM and Onyx is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare and BRIM Biotechnology 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 BRIM Biotechnology are associated (or correlated) with Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of BRIM Biotechnology i.e., BRIM Biotechnology and Onyx Healthcare go up and down completely randomly.
Pair Corralation between BRIM Biotechnology and Onyx Healthcare
Assuming the 90 days trading horizon BRIM Biotechnology is expected to under-perform the Onyx Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, BRIM Biotechnology is 1.37 times less risky than Onyx Healthcare. The stock trades about -0.31 of its potential returns per unit of risk. The Onyx Healthcare is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 16,250 in Onyx Healthcare on August 30, 2024 and sell it today you would lose (850.00) from holding Onyx Healthcare or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIM Biotechnology vs. Onyx Healthcare
Performance |
| Timeline |
| BRIM Biotechnology |
| Onyx Healthcare |
BRIM Biotechnology and Onyx Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIM Biotechnology and Onyx Healthcare
The main advantage of trading using opposite BRIM Biotechnology and Onyx Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIM Biotechnology position performs unexpectedly, Onyx Healthcare 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 Onyx Healthcare will offset losses from the drop in Onyx Healthcare's long position.| BRIM Biotechnology vs. Taiwan Semiconductor Manufacturing | BRIM Biotechnology vs. Hon Hai Precision | BRIM Biotechnology vs. MediaTek | BRIM Biotechnology vs. Chunghwa Telecom Co |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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