Correlation Between BioLife Solutions and ResMed

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

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

Diversification Opportunities for BioLife Solutions and ResMed

0.69

Correlation Coefficient

BioLife Solutions  ResMed

Poor diversification

The 3 months correlation between BioLife and ResMed is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BioLife Solutions and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and BioLife Solutions 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 BioLife Solutions are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of BioLife Solutions i.e., BioLife Solutions and ResMed go up and down completely randomly.

Pair Corralation between BioLife Solutions and ResMed

Given the investment horizon of 90 days BioLife Solutions is expected to generate 1.62 times more return on investment than ResMed. However, BioLife Solutions is 1.62 times more volatile than ResMed Inc. It trades about 0.02 of its potential returns per unit of risk. ResMed Inc is currently generating about 0.0 per unit of risk. If you would invest  2,140  in BioLife Solutions on January 8, 2025 and sell it today you would lose (78.00) from holding BioLife Solutions or give up 3.64% of portfolio value over 90 days.

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

BioLife Solutions  vs.  ResMed Inc

BioLife Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLife Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ResMed Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ResMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BioLife Solutions and ResMed

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

The idea behind BioLife Solutions and ResMed Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.