Correlation Between Desktop Metal and BIO Key
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and BIO Key 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 Desktop Metal and BIO Key into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and BIO Key International, you can compare the effects of market volatilities on Desktop Metal and BIO Key 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 Desktop Metal with a short position of BIO Key. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and BIO Key.
Diversification Opportunities for Desktop Metal and BIO Key
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Desktop and BIO is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International and Desktop Metal 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 Desktop Metal are associated (or correlated) with BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Desktop Metal i.e., Desktop Metal and BIO Key go up and down completely randomly.
Pair Corralation between Desktop Metal and BIO Key
Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the BIO Key. But the stock apears to be less risky and, when comparing its historical volatility, Desktop Metal is 3.5 times less risky than BIO Key. The stock trades about -0.18 of its potential returns per unit of risk. The BIO Key International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 84.00 in BIO Key International on October 31, 2024 and sell it today you would earn a total of 59.00 from holding BIO Key International or generate 70.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desktop Metal vs. BIO Key International
Performance |
| Timeline |
| Desktop Metal |
| BIO Key International |
Desktop Metal and BIO Key Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and BIO Key
The main advantage of trading using opposite Desktop Metal and BIO Key positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, BIO Key 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 BIO Key will offset losses from the drop in BIO Key's long position.| Desktop Metal vs. Rigetti Computing | Desktop Metal vs. IONQ WT | Desktop Metal vs. Arqit Quantum Warrants | Desktop Metal vs. QBTS WT |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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