Correlation Between Bio Gene and Patriot Lithium
Can any of the company-specific risk be diversified away by investing in both Bio Gene and Patriot Lithium 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 Patriot Lithium 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 Patriot Lithium, you can compare the effects of market volatilities on Bio Gene and Patriot Lithium 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 Patriot Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Gene and Patriot Lithium.
Diversification Opportunities for Bio Gene and Patriot Lithium
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bio and Patriot is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bio Gene Technology and Patriot Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Lithium 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 Patriot Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Lithium has no effect on the direction of Bio Gene i.e., Bio Gene and Patriot Lithium go up and down completely randomly.
Pair Corralation between Bio Gene and Patriot Lithium
Assuming the 90 days trading horizon Bio Gene Technology is expected to under-perform the Patriot Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Bio Gene Technology is 1.16 times less risky than Patriot Lithium. The stock trades about -0.02 of its potential returns per unit of risk. The Patriot Lithium is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Patriot Lithium on September 12, 2024 and sell it today you would earn a total of 0.80 from holding Patriot Lithium or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Bio Gene Technology vs. Patriot Lithium
Performance |
| Timeline |
| Bio Gene Technology |
| Patriot Lithium |
Bio Gene and Patriot Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Gene and Patriot Lithium
The main advantage of trading using opposite Bio Gene and Patriot Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Gene position performs unexpectedly, Patriot Lithium 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 Patriot Lithium will offset losses from the drop in Patriot Lithium's long position.| Bio Gene vs. Nufarm Finance NZ | Bio Gene vs. Navigator Global Investments | Bio Gene vs. Mirrabooka Investments | Bio Gene vs. Falcon Metals |
| Patriot Lithium vs. Hansen Technologies | Patriot Lithium vs. Globe Metals Mining | Patriot Lithium vs. Galena Mining | Patriot Lithium vs. Ras Technology Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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