Correlation Between Buckle and ADMA Biologics

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Can any of the company-specific risk be diversified away by investing in both Buckle and ADMA Biologics 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 Buckle and ADMA Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buckle Inc and ADMA Biologics, you can compare the effects of market volatilities on Buckle and ADMA Biologics 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 Buckle with a short position of ADMA Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and ADMA Biologics.

Diversification Opportunities for Buckle and ADMA Biologics

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Buckle and ADMA Biologics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and Buckle 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 Buckle Inc are associated (or correlated) with ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Buckle i.e., Buckle and ADMA Biologics go up and down completely randomly.

Pair Corralation between Buckle and ADMA Biologics

Considering the 90-day investment horizon Buckle Inc is expected to generate 0.44 times more return on investment than ADMA Biologics. However, Buckle Inc is 2.29 times less risky than ADMA Biologics. It trades about 0.34 of its potential returns per unit of risk. ADMA Biologics is currently generating about 0.14 per unit of risk. If you would invest  3,220  in Buckle Inc on September 2, 2022 and sell it today you would earn a total of  1,201  from holding Buckle Inc or generate 37.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Buckle Inc  vs.  ADMA Biologics

 Performance (%) 
       Timeline  
Buckle Inc 
Buckle Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Buckle Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, Buckle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Buckle Price Channel

ADMA Biologics 
ADMA Biologics Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ADMA Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, ADMA Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

ADMA Biologics Price Channel

Buckle and ADMA Biologics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Buckle and ADMA Biologics

The main advantage of trading using opposite Buckle and ADMA Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, ADMA Biologics 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 ADMA Biologics will offset losses from the drop in ADMA Biologics' long position.
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The idea behind Buckle Inc and ADMA Biologics 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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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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