Correlation Between Therma Bright and Microbix Biosystems
Can any of the company-specific risk be diversified away by investing in both Therma Bright and Microbix Biosystems 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 Therma Bright and Microbix Biosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Microbix Biosystems, you can compare the effects of market volatilities on Therma Bright and Microbix Biosystems 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 Therma Bright with a short position of Microbix Biosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Microbix Biosystems.
Diversification Opportunities for Therma Bright and Microbix Biosystems
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Therma and Microbix is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Microbix Biosystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbix Biosystems and Therma Bright 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 Therma Bright are associated (or correlated) with Microbix Biosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbix Biosystems has no effect on the direction of Therma Bright i.e., Therma Bright and Microbix Biosystems go up and down completely randomly.
Pair Corralation between Therma Bright and Microbix Biosystems
Assuming the 90 days trading horizon Therma Bright is expected to generate 4.9 times more return on investment than Microbix Biosystems. However, Therma Bright is 4.9 times more volatile than Microbix Biosystems. It trades about 0.05 of its potential returns per unit of risk. Microbix Biosystems is currently generating about 0.0 per unit of risk. If you would invest 7.00 in Therma Bright on September 3, 2024 and sell it today you would lose (4.25) from holding Therma Bright or give up 60.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Therma Bright vs. Microbix Biosystems
Performance |
| Timeline |
| Therma Bright |
| Microbix Biosystems |
Therma Bright and Microbix Biosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and Microbix Biosystems
The main advantage of trading using opposite Therma Bright and Microbix Biosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright position performs unexpectedly, Microbix Biosystems 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 Microbix Biosystems will offset losses from the drop in Microbix Biosystems' long position.| Therma Bright vs. Solar Alliance Energy | Therma Bright vs. Braille Energy Systems | Therma Bright vs. MedMira | Therma Bright vs. Lite Access Technologies |
| Microbix Biosystems vs. Helix BioPharma Corp | Microbix Biosystems vs. Oncolytics Biotech | Microbix Biosystems vs. Resverlogix Corp | Microbix Biosystems vs. Theratechnologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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