Correlation Between Sotera Health and Burning Rock
Can any of the company-specific risk be diversified away by investing in both Sotera Health 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 Sotera Health and Burning Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotera Health Co and Burning Rock Biotech, you can compare the effects of market volatilities on Sotera Health 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 Sotera Health with a short position of Burning Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotera Health and Burning Rock.
Diversification Opportunities for Sotera Health and Burning Rock
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sotera and Burning is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sotera Health Co 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 Sotera Health 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 Sotera Health Co 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 Sotera Health i.e., Sotera Health and Burning Rock go up and down completely randomly.
Pair Corralation between Sotera Health and Burning Rock
Considering the 90-day investment horizon Sotera Health Co is expected to under-perform the Burning Rock. But the stock apears to be less risky and, when comparing its historical volatility, Sotera Health Co is 2.7 times less risky than Burning Rock. The stock trades about -0.3 of its potential returns per unit of risk. The Burning Rock Biotech is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 285.00 in Burning Rock Biotech on August 27, 2024 and sell it today you would earn a total of 271.00 from holding Burning Rock Biotech or generate 95.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotera Health Co vs. Burning Rock Biotech
Performance |
| Timeline |
| Sotera Health |
| Burning Rock Biotech |
Sotera Health and Burning Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotera Health and Burning Rock
The main advantage of trading using opposite Sotera Health and Burning Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotera Health 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.| Sotera Health vs. Qiagen NV | Sotera Health vs. Aclaris Therapeutics | Sotera Health vs. Neogen | Sotera Health vs. RadNet Inc |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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