Correlation Between International Business and Lifeline Biotechnologies
Can any of the company-specific risk be diversified away by investing in both International Business and Lifeline Biotechnologies 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 International Business and Lifeline Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Lifeline Biotechnologies, you can compare the effects of market volatilities on International Business and Lifeline Biotechnologies 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 International Business with a short position of Lifeline Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Lifeline Biotechnologies.
Diversification Opportunities for International Business and Lifeline Biotechnologies
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Lifeline is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Lifeline Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeline Biotechnologies and International Business 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 International Business Machines are associated (or correlated) with Lifeline Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeline Biotechnologies has no effect on the direction of International Business i.e., International Business and Lifeline Biotechnologies go up and down completely randomly.
Pair Corralation between International Business and Lifeline Biotechnologies
Considering the 90-day investment horizon International Business is expected to generate 116.8 times less return on investment than Lifeline Biotechnologies. But when comparing it to its historical volatility, International Business Machines is 80.19 times less risky than Lifeline Biotechnologies. It trades about 0.09 of its potential returns per unit of risk. Lifeline Biotechnologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Lifeline Biotechnologies on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Lifeline Biotechnologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.36% |
| Values | Daily Returns |
International Business Machine vs. Lifeline Biotechnologies
Performance |
| Timeline |
| International Business |
| Lifeline Biotechnologies |
International Business and Lifeline Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Lifeline Biotechnologies
The main advantage of trading using opposite International Business and Lifeline Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Lifeline Biotechnologies 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 Lifeline Biotechnologies will offset losses from the drop in Lifeline Biotechnologies' long position.| International Business vs. Globant SA | International Business vs. Concentrix | International Business vs. Cognizant Technology Solutions | International Business vs. CDW Corp |
| Lifeline Biotechnologies vs. Modular Medical | Lifeline Biotechnologies vs. Neuropace | Lifeline Biotechnologies vs. Nexalin Technology | Lifeline Biotechnologies vs. STRATA Skin Sciences |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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