Correlation Between BioLife Sciences and Wearable Health

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

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

Diversification Opportunities for BioLife Sciences and Wearable Health

1.0

Correlation Coefficient

BioLife Sciences  Wearable Health

No risk reduction

The 3 months correlation between BioLife and Wearable is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BioLife Sciences and Wearable Health Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Health Solutions and BioLife Sciences 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 BioLife Sciences are associated (or correlated) with Wearable Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Health Solutions has no effect on the direction of BioLife Sciences i.e., BioLife Sciences and Wearable Health go up and down completely randomly.

Pair Corralation between BioLife Sciences and Wearable Health

If you would invest  0.01  in Wearable Health Solutions on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Wearable Health Solutions or generate 0.0% return on investment over 90 days.

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

BioLife Sciences  vs.  Wearable Health Solutions

BioLife Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLife Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BioLife Sciences is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wearable Health Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wearable Health is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BioLife Sciences and Wearable Health

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

The idea behind BioLife Sciences and Wearable Health Solutions 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.