Correlation Between AptaBio Therapeutics and BGF Retail
Can any of the company-specific risk be diversified away by investing in both AptaBio Therapeutics and BGF Retail 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 AptaBio Therapeutics and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AptaBio Therapeutics and BGF Retail Co, you can compare the effects of market volatilities on AptaBio Therapeutics and BGF Retail 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 AptaBio Therapeutics with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of AptaBio Therapeutics and BGF Retail.
Diversification Opportunities for AptaBio Therapeutics and BGF Retail
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AptaBio and BGF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and AptaBio Therapeutics 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 AptaBio Therapeutics are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and BGF Retail go up and down completely randomly.
Pair Corralation between AptaBio Therapeutics and BGF Retail
Assuming the 90 days trading horizon AptaBio Therapeutics is expected to under-perform the BGF Retail. In addition to that, AptaBio Therapeutics is 1.33 times more volatile than BGF Retail Co. It trades about -0.28 of its total potential returns per unit of risk. BGF Retail Co is currently generating about -0.08 per unit of volatility. If you would invest 11,200,000 in BGF Retail Co on August 29, 2024 and sell it today you would lose (500,000) from holding BGF Retail Co or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AptaBio Therapeutics vs. BGF Retail Co
Performance |
| Timeline |
| AptaBio Therapeutics |
| BGF Retail |
AptaBio Therapeutics and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AptaBio Therapeutics and BGF Retail
The main advantage of trading using opposite AptaBio Therapeutics and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AptaBio Therapeutics position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.The idea behind AptaBio Therapeutics and BGF Retail Co 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.| BGF Retail vs. AptaBio Therapeutics | BGF Retail vs. Daewoo SBI SPAC | BGF Retail vs. Dream Security co | BGF Retail vs. Microfriend |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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