Correlation Between Bio Techne and Sims Metal

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

By analyzing existing cross correlation between Bio Techne Corp and Sims Metal Management, you can compare the effects of market volatilities on Bio Techne and Sims Metal 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 Bio Techne with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Techne and Sims Metal.

Diversification Opportunities for Bio Techne and Sims Metal

0.29

Correlation Coefficient

Bio Techne  Sims Metal

Modest diversification

The 3 months correlation between Bio and Sims is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and Bio Techne 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 Bio Techne Corp are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Bio Techne i.e., Bio Techne and Sims Metal go up and down completely randomly.

Pair Corralation between Bio Techne and Sims Metal

Assuming the 90 days trading horizon Bio Techne Corp is expected to under-perform the Sims Metal. In addition to that, Bio Techne is 1.35 times more volatile than Sims Metal Management. It trades about -0.13 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.04 per unit of volatility. If you would invest  829.00  in Sims Metal Management on February 15, 2025 and sell it today you would earn a total of  46.00  from holding Sims Metal Management or generate 5.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Bio Techne Corp  vs.  Sims Metal Management

Bio Techne Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bio Techne Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sims Metal Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sims Metal Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sims Metal may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Bio Techne and Sims Metal

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

The idea behind Bio Techne Corp and Sims Metal Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.