Correlation Between Genel Energy and Bioventus

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

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

Diversification Opportunities for Genel Energy and Bioventus

-0.35

Correlation Coefficient

Genel Energy  Bioventus

Very good diversification

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

Pair Corralation between Genel Energy and Bioventus

Assuming the 90 days horizon Genel Energy plc is expected to under-perform the Bioventus. In addition to that, Genel Energy is 1.55 times more volatile than Bioventus. It trades about -0.22 of its total potential returns per unit of risk. Bioventus is currently generating about 0.21 per unit of volatility. If you would invest  969.00  in Bioventus on June 29, 2024 and sell it today you would earn a total of  136.00  from holding Bioventus or generate 14.04% return on investment over 90 days.

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

Genel Energy plc  vs.  Bioventus

Genel Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genel Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bioventus

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bioventus are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Bioventus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genel Energy and Bioventus

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

The idea behind Genel Energy plc and Bioventus 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.