Correlation Between Bio Meat and Libra Insurance
Can any of the company-specific risk be diversified away by investing in both Bio Meat and Libra Insurance 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 Meat and Libra Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Meat Foodtech and Libra Insurance, you can compare the effects of market volatilities on Bio Meat and Libra Insurance 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 Meat with a short position of Libra Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Meat and Libra Insurance.
Diversification Opportunities for Bio Meat and Libra Insurance
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bio and Libra is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bio Meat Foodtech and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance and Bio Meat 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 Meat Foodtech are associated (or correlated) with Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of Bio Meat i.e., Bio Meat and Libra Insurance go up and down completely randomly.
Pair Corralation between Bio Meat and Libra Insurance
Assuming the 90 days trading horizon Bio Meat Foodtech is expected to under-perform the Libra Insurance. In addition to that, Bio Meat is 1.42 times more volatile than Libra Insurance. It trades about -0.05 of its total potential returns per unit of risk. Libra Insurance is currently generating about 0.09 per unit of volatility. If you would invest 35,990 in Libra Insurance on August 28, 2024 and sell it today you would earn a total of 46,720 from holding Libra Insurance or generate 129.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Meat Foodtech vs. Libra Insurance
Performance |
| Timeline |
| Bio Meat Foodtech |
| Libra Insurance |
Bio Meat and Libra Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Meat and Libra Insurance
The main advantage of trading using opposite Bio Meat and Libra Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Meat position performs unexpectedly, Libra Insurance 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 Libra Insurance will offset losses from the drop in Libra Insurance's long position.| Bio Meat vs. Israel China Biotechnology | Bio Meat vs. Teuza A Fairchild | Bio Meat vs. Priortech | Bio Meat vs. Orbit Technologies |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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