Correlation Between Aerodrome and Bonus Biogroup

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

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

Diversification Opportunities for Aerodrome and Bonus Biogroup

-0.63

Correlation Coefficient

Aerodrome  Bonus Biogroup

Excellent diversification

The 3 months correlation between Aerodrome and Bonus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group and Bonus Biogroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonus Biogroup and Aerodrome 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 Aerodrome Group are associated (or correlated) with Bonus Biogroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonus Biogroup has no effect on the direction of Aerodrome i.e., Aerodrome and Bonus Biogroup go up and down completely randomly.

Pair Corralation between Aerodrome and Bonus Biogroup

Assuming the 90 days trading horizon Aerodrome Group is expected to under-perform the Bonus Biogroup. In addition to that, Aerodrome is 2.02 times more volatile than Bonus Biogroup. It trades about -0.36 of its total potential returns per unit of risk. Bonus Biogroup is currently generating about -0.29 per unit of volatility. If you would invest  1,160  in Bonus Biogroup on September 15, 2024 and sell it today you would lose (100.00) from holding Bonus Biogroup or give up 8.62% of portfolio value over 90 days.

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

Aerodrome Group  vs.  Bonus Biogroup

Aerodrome Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aerodrome sustained solid returns over the last few months and may actually be approaching a breakup point.

Bonus Biogroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonus Biogroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aerodrome and Bonus Biogroup

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

The idea behind Aerodrome Group and Bonus Biogroup 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.