Correlation Between Biome Technologies and Revolution Beauty
Can any of the company-specific risk be diversified away by investing in both Biome Technologies and Revolution Beauty 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 Biome Technologies and Revolution Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biome Technologies Plc and Revolution Beauty Group, you can compare the effects of market volatilities on Biome Technologies and Revolution Beauty 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 Biome Technologies with a short position of Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biome Technologies and Revolution Beauty.
Diversification Opportunities for Biome Technologies and Revolution Beauty
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biome and Revolution is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Biome Technologies Plc and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty and Biome Technologies 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 Biome Technologies Plc are associated (or correlated) with Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of Biome Technologies i.e., Biome Technologies and Revolution Beauty go up and down completely randomly.
Pair Corralation between Biome Technologies and Revolution Beauty
Assuming the 90 days trading horizon Biome Technologies Plc is expected to under-perform the Revolution Beauty. In addition to that, Biome Technologies is 1.17 times more volatile than Revolution Beauty Group. It trades about -0.19 of its total potential returns per unit of risk. Revolution Beauty Group is currently generating about -0.08 per unit of volatility. If you would invest 1,634 in Revolution Beauty Group on September 24, 2024 and sell it today you would lose (234.00) from holding Revolution Beauty Group or give up 14.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biome Technologies Plc vs. Revolution Beauty Group
Performance |
| Timeline |
| Biome Technologies Plc |
| Revolution Beauty |
Biome Technologies and Revolution Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biome Technologies and Revolution Beauty
The main advantage of trading using opposite Biome Technologies and Revolution Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biome Technologies position performs unexpectedly, Revolution Beauty 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 Revolution Beauty will offset losses from the drop in Revolution Beauty's long position.| Biome Technologies vs. Givaudan SA | Biome Technologies vs. Antofagasta PLC | Biome Technologies vs. Ferrexpo PLC | Biome Technologies vs. Atalaya Mining |
| Revolution Beauty vs. Toyota Motor Corp | Revolution Beauty vs. SoftBank Group Corp | Revolution Beauty vs. OTP Bank Nyrt | Revolution Beauty vs. Newmont Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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