Correlation Between DiaMedica Therapeutics and Bio Rad

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Can any of the company-specific risk be diversified away by investing in both DiaMedica Therapeutics and Bio Rad 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 DiaMedica Therapeutics and Bio Rad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiaMedica Therapeutics and Bio Rad Laboratories, you can compare the effects of market volatilities on DiaMedica Therapeutics and Bio Rad 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 DiaMedica Therapeutics with a short position of Bio Rad. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiaMedica Therapeutics and Bio Rad.

Diversification Opportunities for DiaMedica Therapeutics and Bio Rad

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between DiaMedica and Bio is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and Bio Rad Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Rad Laboratories and DiaMedica Therapeutics 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 DiaMedica Therapeutics are associated (or correlated) with Bio Rad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Rad Laboratories has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and Bio Rad go up and down completely randomly.

Pair Corralation between DiaMedica Therapeutics and Bio Rad

Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 1.17 times less return on investment than Bio Rad. In addition to that, DiaMedica Therapeutics is 1.33 times more volatile than Bio Rad Laboratories. It trades about 0.07 of its total potential returns per unit of risk. Bio Rad Laboratories is currently generating about 0.1 per unit of volatility. If you would invest  23,157  in Bio Rad Laboratories on May 6, 2025 and sell it today you would earn a total of  4,523  from holding Bio Rad Laboratories or generate 19.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

DiaMedica Therapeutics  vs.  Bio Rad Laboratories

 Performance 
       Timeline  
DiaMedica Therapeutics 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DiaMedica Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, DiaMedica Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.
Bio Rad Laboratories 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bio Rad Laboratories are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Bio Rad displayed solid returns over the last few months and may actually be approaching a breakup point.

DiaMedica Therapeutics and Bio Rad Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DiaMedica Therapeutics and Bio Rad

The main advantage of trading using opposite DiaMedica Therapeutics and Bio Rad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiaMedica Therapeutics position performs unexpectedly, Bio Rad 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 Bio Rad will offset losses from the drop in Bio Rad's long position.
The idea behind DiaMedica Therapeutics and Bio Rad Laboratories 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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