Correlation Between Bio Meat and Equital

Can any of the company-specific risk be diversified away by investing in both Bio Meat and Equital 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 Bio Meat and Equital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bio Meat Foodtech and Equital, you can compare the effects of market volatilities on Bio Meat and Equital 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 Bio Meat with a short position of Equital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Meat and Equital.

Diversification Opportunities for Bio Meat and Equital

-0.35

Correlation Coefficient

Bio Meat  Equital

Very good diversification

The 3 months correlation between Bio and Equital is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bio Meat Foodtech and Equital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equital and Bio Meat 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 Bio Meat Foodtech are associated (or correlated) with Equital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equital has no effect on the direction of Bio Meat i.e., Bio Meat and Equital go up and down completely randomly.

Pair Corralation between Bio Meat and Equital

Assuming the 90 days trading horizon Bio Meat Foodtech is expected to generate 0.83 times more return on investment than Equital. However, Bio Meat Foodtech is 1.21 times less risky than Equital. It trades about 0.01 of its potential returns per unit of risk. Equital is currently generating about -0.18 per unit of risk. If you would invest  4,400  in Bio Meat Foodtech on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Bio Meat Foodtech or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bio Meat Foodtech  vs.  Equital

Bio Meat Foodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Meat Foodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Equital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Equital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bio Meat and Equital

The main advantage of trading using opposite Bio Meat and Equital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Meat position performs unexpectedly, Equital 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 Equital will offset losses from the drop in Equital's long position.

The idea behind Bio Meat Foodtech and Equital 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.

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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.