Correlation Between BioMrieux and Neuronetics

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

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

Diversification Opportunities for BioMrieux and Neuronetics

-0.3

Correlation Coefficient

BioMrieux  Neuronetics

Very good diversification

The 3 months correlation between BioMrieux and Neuronetics is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding bioMrieux SA and Neuronetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuronetics and BioMrieux 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 bioMrieux SA are associated (or correlated) with Neuronetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuronetics has no effect on the direction of BioMrieux i.e., BioMrieux and Neuronetics go up and down completely randomly.

Pair Corralation between BioMrieux and Neuronetics

Assuming the 90 days horizon bioMrieux SA is expected to generate 1.08 times more return on investment than Neuronetics. However, BioMrieux is 1.08 times more volatile than Neuronetics. It trades about -0.02 of its potential returns per unit of risk. Neuronetics is currently generating about -0.47 per unit of risk. If you would invest  10,855  in bioMrieux SA on January 30, 2024 and sell it today you would lose (288.00) from holding bioMrieux SA or give up 2.65% of portfolio value over 90 days.

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

bioMrieux SA  vs.  Neuronetics

bioMrieux SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days bioMrieux SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, BioMrieux is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Neuronetics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Neuronetics may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with BioMrieux and Neuronetics

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

The idea behind bioMrieux SA and Neuronetics 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.