Correlation Between Homebiogas and BioLight Life
Can any of the company-specific risk be diversified away by investing in both Homebiogas and BioLight Life 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 Homebiogas and BioLight Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homebiogas and BioLight Life Sciences, you can compare the effects of market volatilities on Homebiogas and BioLight Life 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 Homebiogas with a short position of BioLight Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homebiogas and BioLight Life.
Diversification Opportunities for Homebiogas and BioLight Life
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Homebiogas and BioLight is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Homebiogas and BioLight Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLight Life Sciences and Homebiogas 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 Homebiogas are associated (or correlated) with BioLight Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLight Life Sciences has no effect on the direction of Homebiogas i.e., Homebiogas and BioLight Life go up and down completely randomly.
Pair Corralation between Homebiogas and BioLight Life
Assuming the 90 days trading horizon Homebiogas is expected to under-perform the BioLight Life. But the stock apears to be less risky and, when comparing its historical volatility, Homebiogas is 2.06 times less risky than BioLight Life. The stock trades about -0.5 of its potential returns per unit of risk. The BioLight Life Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44,550 in BioLight Life Sciences on September 3, 2024 and sell it today you would earn a total of 8,450 from holding BioLight Life Sciences or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homebiogas vs. BioLight Life Sciences
Performance |
| Timeline |
| Homebiogas |
| BioLight Life Sciences |
Homebiogas and BioLight Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homebiogas and BioLight Life
The main advantage of trading using opposite Homebiogas and BioLight Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homebiogas position performs unexpectedly, BioLight Life 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 BioLight Life will offset losses from the drop in BioLight Life's long position.| Homebiogas vs. Energix Renewable Energies | Homebiogas vs. Doral Group Renewable | Homebiogas vs. Brainsway | Homebiogas vs. Mivne Real Estate |
| BioLight Life vs. Homebiogas | BioLight Life vs. Bio Meat Foodtech | BioLight Life vs. Victory Supermarket Chain | BioLight Life vs. Iargento Hi Tech |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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