Correlation Between Biomedix Incubator and Paz Oil

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

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

Diversification Opportunities for Biomedix Incubator and Paz Oil

-0.59

Correlation Coefficient

Biomedix Incubator  Paz Oil

Excellent diversification

The 3 months correlation between Biomedix and Paz is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Biomedix Incubator and Paz Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paz Oil and Biomedix Incubator 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 Biomedix Incubator are associated (or correlated) with Paz Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paz Oil has no effect on the direction of Biomedix Incubator i.e., Biomedix Incubator and Paz Oil go up and down completely randomly.

Pair Corralation between Biomedix Incubator and Paz Oil

Assuming the 90 days trading horizon Biomedix Incubator is expected to under-perform the Paz Oil. In addition to that, Biomedix Incubator is 2.86 times more volatile than Paz Oil. It trades about -0.14 of its total potential returns per unit of risk. Paz Oil is currently generating about 0.36 per unit of volatility. If you would invest  5,020,000  in Paz Oil on April 23, 2025 and sell it today you would earn a total of  1,854,000  from holding Paz Oil or generate 36.93% return on investment over 90 days.

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

Biomedix Incubator  vs.  Paz Oil

Biomedix Incubator

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biomedix Incubator 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 August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Paz Oil

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Paz Oil are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Paz Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomedix Incubator and Paz Oil

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

The idea behind Biomedix Incubator and Paz Oil 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.