Correlation Between Pick N and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Pick N and Lion 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 Pick N and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick n Pay and Lion Biotechnologies, you can compare the effects of market volatilities on Pick N and Lion 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 Pick N with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and Lion Biotechnologies.
Diversification Opportunities for Pick N and Lion Biotechnologies
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pick and Lion is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pick n Pay and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Pick N 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 Pick n Pay are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Pick N i.e., Pick N and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Pick N and Lion Biotechnologies
Assuming the 90 days horizon Pick N is expected to generate 1.92 times less return on investment than Lion Biotechnologies. But when comparing it to its historical volatility, Pick n Pay is 1.74 times less risky than Lion Biotechnologies. It trades about 0.05 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 590.00 in Lion Biotechnologies on September 2, 2024 and sell it today you would earn a total of 310.00 from holding Lion Biotechnologies or generate 52.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pick n Pay vs. Lion Biotechnologies
Performance |
| Timeline |
| Pick n Pay |
| Lion Biotechnologies |
Pick N and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pick N and Lion Biotechnologies
The main advantage of trading using opposite Pick N and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N position performs unexpectedly, Lion 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Pick N vs. Taiwan Semiconductor Manufacturing | Pick N vs. AUSTEVOLL SEAFOOD | Pick N vs. Tower Semiconductor | Pick N vs. CN MODERN DAIRY |
| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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