Correlation Between Allied Corp and Biofrontera
Can any of the company-specific risk be diversified away by investing in both Allied Corp and Biofrontera 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 Allied Corp and Biofrontera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Corp and Biofrontera, you can compare the effects of market volatilities on Allied Corp and Biofrontera 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 Allied Corp with a short position of Biofrontera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Corp and Biofrontera.
Diversification Opportunities for Allied Corp and Biofrontera
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allied and Biofrontera is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Allied Corp and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Allied Corp 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 Allied Corp are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of Allied Corp i.e., Allied Corp and Biofrontera go up and down completely randomly.
Pair Corralation between Allied Corp and Biofrontera
Given the investment horizon of 90 days Allied Corp is expected to generate 2.2 times more return on investment than Biofrontera. However, Allied Corp is 2.2 times more volatile than Biofrontera. It trades about 0.05 of its potential returns per unit of risk. Biofrontera is currently generating about -0.04 per unit of risk. If you would invest 25.00 in Allied Corp on August 29, 2024 and sell it today you would lose (21.97) from holding Allied Corp or give up 87.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Corp vs. Biofrontera
Performance |
| Timeline |
| Allied Corp |
| Biofrontera |
Allied Corp and Biofrontera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Corp and Biofrontera
The main advantage of trading using opposite Allied Corp and Biofrontera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Corp position performs unexpectedly, Biofrontera 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 Biofrontera will offset losses from the drop in Biofrontera's long position.| Allied Corp vs. The BC Bud | Allied Corp vs. Amexdrug | Allied Corp vs. Aion Therapeutic | Allied Corp vs. Antisense Therapeutics Limited |
| Biofrontera vs. Shuttle Pharmaceuticals | Biofrontera vs. Akanda Corp | Biofrontera vs. China Pharma Holdings | Biofrontera vs. Sunshine Biopharma Warrant |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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