Correlation Between Biotron and Awakn Life

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

By analyzing existing cross correlation between Biotron Limited and Awakn Life Sciences, you can compare the effects of market volatilities on Biotron and Awakn Life 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 Biotron with a short position of Awakn Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotron and Awakn Life.

Diversification Opportunities for Biotron and Awakn Life

0.26

Correlation Coefficient

Biotron  Awakn Life

Modest diversification

The 3 months correlation between Biotron and Awakn is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Biotron Limited and Awakn Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awakn Life Sciences and Biotron 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 Biotron Limited are associated (or correlated) with Awakn Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awakn Life Sciences has no effect on the direction of Biotron i.e., Biotron and Awakn Life go up and down completely randomly.

Pair Corralation between Biotron and Awakn Life

Assuming the 90 days horizon Biotron Limited is expected to under-perform the Awakn Life. But the pink sheet apears to be less risky and, when comparing its historical volatility, Biotron Limited is 1.42 times less risky than Awakn Life. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Awakn Life Sciences is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Awakn Life Sciences on September 4, 2024 and sell it today you would earn a total of  0.68  from holding Awakn Life Sciences or generate 9.71% return on investment over 90 days.

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

Biotron Limited  vs.  Awakn Life Sciences

Biotron Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Awakn Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Awakn Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Awakn Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biotron and Awakn Life

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

The idea behind Biotron Limited and Awakn Life Sciences 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.