Correlation Between Regencell Bioscience and ADMA Biologics

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

By analyzing existing cross correlation between Regencell Bioscience Holdings and ADMA Biologics, you can compare the effects of market volatilities on Regencell Bioscience 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 Regencell Bioscience with a short position of ADMA Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regencell Bioscience and ADMA Biologics.

Diversification Opportunities for Regencell Bioscience and ADMA Biologics

-0.18

Correlation Coefficient

Regencell Bioscience  ADMA Biologics

Good diversification

The 3 months correlation between Regencell and ADMA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Regencell Bioscience Holdings and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and Regencell Bioscience 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 Regencell Bioscience Holdings 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 Regencell Bioscience i.e., Regencell Bioscience and ADMA Biologics go up and down completely randomly.

Pair Corralation between Regencell Bioscience and ADMA Biologics

Considering the 90-day investment horizon Regencell Bioscience Holdings is expected to under-perform the ADMA Biologics. In addition to that, Regencell Bioscience is 2.44 times more volatile than ADMA Biologics. It trades about -0.02 of its total potential returns per unit of risk. ADMA Biologics is currently generating about 0.25 per unit of volatility. If you would invest  515.00  in ADMA Biologics on February 18, 2024 and sell it today you would earn a total of  406.00  from holding ADMA Biologics or generate 78.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Regencell Bioscience Holdings  vs.  ADMA Biologics

Regencell Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regencell Bioscience Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ADMA Biologics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ADMA Biologics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, ADMA Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regencell Bioscience and ADMA Biologics

The main advantage of trading using opposite Regencell Bioscience and ADMA Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regencell Bioscience 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.

The idea behind Regencell Bioscience Holdings 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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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.