Correlation Between Burning Rock and Olink Holding

Can any of the company-specific risk be diversified away by investing in both Burning Rock and Olink Holding 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 Olink Holding 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 Olink Holding AB, you can compare the effects of market volatilities on Burning Rock and Olink Holding 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 Olink Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burning Rock and Olink Holding.

Diversification Opportunities for Burning Rock and Olink Holding

-0.36

Correlation Coefficient

Burning Rock  Olink Holding

Very good diversification

The 3 months correlation between Burning and Olink is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock BiotechLtd and Olink Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olink Holding AB 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 Olink Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olink Holding AB has no effect on the direction of Burning Rock i.e., Burning Rock and Olink Holding go up and down completely randomly.

Pair Corralation between Burning Rock and Olink Holding

Considering the 90-day investment horizon Burning Rock BiotechLtd is expected to under-perform the Olink Holding. In addition to that, Burning Rock is 1.08 times more volatile than Olink Holding AB. It trades about -0.02 of its total potential returns per unit of risk. Olink Holding AB is currently generating about 0.05 per unit of volatility. If you would invest  1,126  in Olink Holding AB on February 14, 2024 and sell it today you would earn a total of  1,225  from holding Olink Holding AB or generate 108.79% return on investment over 90 days.

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

Burning Rock BiotechLtd  vs.  Olink Holding AB

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 uncertain basic indicators, Burning Rock may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Olink Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olink Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Olink Holding is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Burning Rock and Olink Holding

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

The idea behind Burning Rock BiotechLtd and Olink Holding AB 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 Global Correlations module to find global opportunities by holding instruments from different markets.