Correlation Between Arch Biopartners and British Amer

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

By analyzing existing cross correlation between Arch Biopartners and biOasis Technologies, you can compare the effects of market volatilities on Arch Biopartners and British Amer 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 Arch Biopartners with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Biopartners and British Amer.

Diversification Opportunities for Arch Biopartners and British Amer

-0.07

Correlation Coefficient

Arch Biopartners  British Amer

Good diversification

The 3 months correlation between Arch and British is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Arch Biopartners and biOasis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biOasis Technologies and Arch Biopartners 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 Arch Biopartners are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biOasis Technologies has no effect on the direction of Arch Biopartners i.e., Arch Biopartners and British Amer go up and down completely randomly.

Pair Corralation between Arch Biopartners and British Amer

Assuming the 90 days trading horizon Arch Biopartners is expected to under-perform the British Amer. But the stock apears to be less risky and, when comparing its historical volatility, Arch Biopartners is 119.72 times less risky than British Amer. The stock trades about -0.03 of its potential returns per unit of risk. The biOasis Technologies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  127.00  in biOasis Technologies on September 3, 2024 and sell it today you would lose (1.00) from holding biOasis Technologies or give up 0.79% of portfolio value over 90 days.

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

Arch Biopartners  vs.  biOasis Technologies

Arch Biopartners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arch Biopartners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Arch Biopartners showed solid returns over the last few months and may actually be approaching a breakup point.

biOasis Technologies

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with Arch Biopartners and British Amer

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

The idea behind Arch Biopartners and biOasis Technologies 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.