Correlation Between Newretail and BRIM Biotechnology

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

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

Diversification Opportunities for Newretail and BRIM Biotechnology

-0.61

Correlation Coefficient

Newretail  BRIM Biotechnology

Excellent diversification

The 3 months correlation between Newretail and BRIM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and BRIM Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIM Biotechnology and Newretail 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 Newretail Co are associated (or correlated) with BRIM Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIM Biotechnology has no effect on the direction of Newretail i.e., Newretail and BRIM Biotechnology go up and down completely randomly.

Pair Corralation between Newretail and BRIM Biotechnology

Assuming the 90 days trading horizon Newretail Co is expected to generate 0.48 times more return on investment than BRIM Biotechnology. However, Newretail Co is 2.08 times less risky than BRIM Biotechnology. It trades about -0.21 of its potential returns per unit of risk. BRIM Biotechnology is currently generating about -0.36 per unit of risk. If you would invest  2,615  in Newretail Co on September 22, 2024 and sell it today you would lose (215.00) from holding Newretail Co or give up 8.22% of portfolio value over 90 days.

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

Newretail Co  vs.  BRIM Biotechnology

Newretail

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newretail Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newretail showed solid returns over the last few months and may actually be approaching a breakup point.

BRIM Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRIM Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Newretail and BRIM Biotechnology

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

The idea behind Newretail Co and BRIM Biotechnology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.