Correlation Between Burning Rock and Genetron Holdings

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

By analyzing existing cross correlation between Burning Rock Biotech and Genetron Holdings, you can compare the effects of market volatilities on Burning Rock and Genetron Holdings 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 Burning Rock with a short position of Genetron Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burning Rock and Genetron Holdings.

Diversification Opportunities for Burning Rock and Genetron Holdings

0.2

Correlation Coefficient

Burning Rock  Genetron Holdings

Modest diversification

The 3 months correlation between Burning and Genetron is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Genetron Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetron Holdings and Burning Rock 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 Burning Rock Biotech are associated (or correlated) with Genetron Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetron Holdings has no effect on the direction of Burning Rock i.e., Burning Rock and Genetron Holdings go up and down completely randomly.

Pair Corralation between Burning Rock and Genetron Holdings

If you would invest  280.00  in Burning Rock Biotech on September 2, 2024 and sell it today you would earn a total of  336.00  from holding Burning Rock Biotech or generate 120.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Burning Rock Biotech  vs.  Genetron Holdings

Burning Rock Biotech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock reported solid returns over the last few months and may actually be approaching a breakup point.

Genetron Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Burning Rock and Genetron Holdings

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

The idea behind Burning Rock Biotech and Genetron Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.