Correlation Between Sofwave Medical and BioLight Life
Can any of the company-specific risk be diversified away by investing in both Sofwave Medical 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 Sofwave Medical and BioLight Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofwave Medical and BioLight Life Sciences, you can compare the effects of market volatilities on Sofwave Medical 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 Sofwave Medical with a short position of BioLight Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and BioLight Life.
Diversification Opportunities for Sofwave Medical and BioLight Life
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sofwave and BioLight is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical i.e., Sofwave Medical and BioLight Life go up and down completely randomly.
Pair Corralation between Sofwave Medical and BioLight Life
Assuming the 90 days trading horizon Sofwave Medical is expected to under-perform the BioLight Life. But the stock apears to be less risky and, when comparing its historical volatility, Sofwave Medical is 2.53 times less risky than BioLight Life. The stock trades about -0.17 of its potential returns per unit of risk. The BioLight Life Sciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 46,900 in BioLight Life Sciences on September 2, 2024 and sell it today you would earn a total of 6,100 from holding BioLight Life Sciences or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofwave Medical vs. BioLight Life Sciences
Performance |
| Timeline |
| Sofwave Medical |
| BioLight Life Sciences |
Sofwave Medical and BioLight Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofwave Medical and BioLight Life
The main advantage of trading using opposite Sofwave Medical and BioLight Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofwave Medical 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.The idea behind Sofwave Medical and BioLight Life Sciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BioLight Life vs. Seach Medical Group | BioLight Life vs. Homebiogas | BioLight Life vs. Imed Infinity Medical Limited | BioLight Life vs. Sofwave Medical |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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