Correlation Between DiaMedica Therapeutics and Burning Rock
Can any of the company-specific risk be diversified away by investing in both DiaMedica Therapeutics and Burning Rock 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 DiaMedica Therapeutics and Burning Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiaMedica Therapeutics and Burning Rock Biotech, you can compare the effects of market volatilities on DiaMedica Therapeutics and Burning Rock 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 DiaMedica Therapeutics with a short position of Burning Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiaMedica Therapeutics and Burning Rock.
Diversification Opportunities for DiaMedica Therapeutics and Burning Rock
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DiaMedica and Burning is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and Burning Rock Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burning Rock Biotech and DiaMedica Therapeutics 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 DiaMedica Therapeutics are associated (or correlated) with Burning Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burning Rock Biotech has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and Burning Rock go up and down completely randomly.
Pair Corralation between DiaMedica Therapeutics and Burning Rock
Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 2.09 times less return on investment than Burning Rock. But when comparing it to its historical volatility, DiaMedica Therapeutics is 1.28 times less risky than Burning Rock. It trades about 0.09 of its potential returns per unit of risk. Burning Rock Biotech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 358.00 in Burning Rock Biotech on November 1, 2024 and sell it today you would earn a total of 309.00 from holding Burning Rock Biotech or generate 86.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiaMedica Therapeutics vs. Burning Rock Biotech
Performance |
| Timeline |
| DiaMedica Therapeutics |
| Burning Rock Biotech |
DiaMedica Therapeutics and Burning Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiaMedica Therapeutics and Burning Rock
The main advantage of trading using opposite DiaMedica Therapeutics and Burning Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiaMedica Therapeutics position performs unexpectedly, Burning Rock 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 Burning Rock will offset losses from the drop in Burning Rock's long position.| DiaMedica Therapeutics vs. Milestone Pharmaceuticals | DiaMedica Therapeutics vs. Seres Therapeutics | DiaMedica Therapeutics vs. Inhibikase Therapeutics | DiaMedica Therapeutics vs. Oncolytics Biotech |
| Burning Rock vs. Fonar | Burning Rock vs. Sera Prognostics | Burning Rock vs. Neuronetics | Burning Rock vs. DarioHealth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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