Correlation Between Burning Rock and Agilent Technologies

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

By analyzing existing cross correlation between Burning Rock BiotechLtd and Agilent Technologies, you can compare the effects of market volatilities on Burning Rock and Agilent Technologies 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 Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burning Rock and Agilent Technologies.

Diversification Opportunities for Burning Rock and Agilent Technologies

-0.74

Correlation Coefficient

Burning Rock  Agilent Technologies

Pay attention - limited upside

The 3 months correlation between Burning and Agilent is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock BiotechLtd and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 BiotechLtd are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Burning Rock i.e., Burning Rock and Agilent Technologies go up and down completely randomly.

Pair Corralation between Burning Rock and Agilent Technologies

Considering the 90-day investment horizon Burning Rock BiotechLtd is expected to generate 3.51 times more return on investment than Agilent Technologies. However, Burning Rock is 3.51 times more volatile than Agilent Technologies. It trades about 0.17 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.11 per unit of risk. If you would invest  70.00  in Burning Rock BiotechLtd on January 31, 2024 and sell it today you would earn a total of  14.00  from holding Burning Rock BiotechLtd or generate 20.0% return on investment over 90 days.

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

Burning Rock BiotechLtd  vs.  Agilent Technologies

Burning Rock BiotechLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock BiotechLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Burning Rock is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Agilent Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Burning Rock and Agilent Technologies

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

The idea behind Burning Rock BiotechLtd and Agilent Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.