Correlation Between BioLight Life and Infimer

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

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

Diversification Opportunities for BioLight Life and Infimer

-0.21

Correlation Coefficient

BioLight Life  Infimer

Very good diversification

The 3 months correlation between BioLight and Infimer is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BioLight Life Sciences and Infimer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infimer and BioLight Life 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 BioLight Life Sciences are associated (or correlated) with Infimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infimer has no effect on the direction of BioLight Life i.e., BioLight Life and Infimer go up and down completely randomly.

Pair Corralation between BioLight Life and Infimer

Assuming the 90 days trading horizon BioLight Life is expected to generate 219.05 times less return on investment than Infimer. But when comparing it to its historical volatility, BioLight Life Sciences is 50.37 times less risky than Infimer. It trades about 0.07 of its potential returns per unit of risk. Infimer is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,500,000  in Infimer on September 27, 2024 and sell it today you would lose (1,520,000) from holding Infimer or give up 60.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

BioLight Life Sciences  vs.  Infimer

BioLight Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

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

Infimer

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Infimer are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infimer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioLight Life and Infimer

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

The idea behind BioLight Life Sciences and Infimer 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.