Correlation Between Bio Techne and Biomarin Pharmaceutical

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

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

Diversification Opportunities for Bio Techne and Biomarin Pharmaceutical

-0.31

Correlation Coefficient

Bio Techne  Biomarin Pharmaceutical

Very good diversification

The 3 months correlation between Bio and Biomarin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and Biomarin Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomarin Pharmaceutical and Bio Techne 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 Techne Corp are associated (or correlated) with Biomarin Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomarin Pharmaceutical has no effect on the direction of Bio Techne i.e., Bio Techne and Biomarin Pharmaceutical go up and down completely randomly.

Pair Corralation between Bio Techne and Biomarin Pharmaceutical

Given the investment horizon of 90 days Bio Techne Corp is expected to generate 0.81 times more return on investment than Biomarin Pharmaceutical. However, Bio Techne Corp is 1.23 times less risky than Biomarin Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. Biomarin Pharmaceutical is currently generating about -0.16 per unit of risk. If you would invest  7,475  in Bio Techne Corp on August 15, 2024 and sell it today you would earn a total of  118.00  from holding Bio Techne Corp or generate 1.58% return on investment over 90 days.

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

Bio Techne Corp  vs.  Biomarin Pharmaceutical

Bio Techne Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Bio Techne is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Biomarin Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomarin Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bio Techne and Biomarin Pharmaceutical

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

The idea behind Bio Techne Corp and Biomarin Pharmaceutical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..