Correlation Between Bio Gene and Firetail Resources
Can any of the company-specific risk be diversified away by investing in both Bio Gene and Firetail Resources 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 Bio Gene and Firetail Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Gene Technology and Firetail Resources, you can compare the effects of market volatilities on Bio Gene and Firetail Resources 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 Bio Gene with a short position of Firetail Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Gene and Firetail Resources.
Diversification Opportunities for Bio Gene and Firetail Resources
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bio and Firetail is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bio Gene Technology and Firetail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetail Resources and Bio Gene 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 Bio Gene Technology are associated (or correlated) with Firetail Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetail Resources has no effect on the direction of Bio Gene i.e., Bio Gene and Firetail Resources go up and down completely randomly.
Pair Corralation between Bio Gene and Firetail Resources
Assuming the 90 days trading horizon Bio Gene Technology is expected to under-perform the Firetail Resources. But the stock apears to be less risky and, when comparing its historical volatility, Bio Gene Technology is 3.5 times less risky than Firetail Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Firetail Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.60 in Firetail Resources on September 3, 2024 and sell it today you would earn a total of 3.40 from holding Firetail Resources or generate 73.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Gene Technology vs. Firetail Resources
Performance |
| Timeline |
| Bio Gene Technology |
| Firetail Resources |
Bio Gene and Firetail Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Gene and Firetail Resources
The main advantage of trading using opposite Bio Gene and Firetail Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Gene position performs unexpectedly, Firetail Resources 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 Firetail Resources will offset losses from the drop in Firetail Resources' long position.| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene vs. Aneka Tambang Tbk |
| Firetail Resources vs. MFF Capital Investments | Firetail Resources vs. Bio Gene Technology | Firetail Resources vs. Hutchison Telecommunications | Firetail Resources vs. Australian United 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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