Correlation Between Biocardia and Innate Pharma
Can any of the company-specific risk be diversified away by investing in both Biocardia and Innate Pharma 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 Biocardia and Innate Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biocardia and Innate Pharma, you can compare the effects of market volatilities on Biocardia and Innate Pharma 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 Biocardia with a short position of Innate Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biocardia and Innate Pharma.
Diversification Opportunities for Biocardia and Innate Pharma
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biocardia and Innate is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma and Biocardia 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 Biocardia are associated (or correlated) with Innate Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innate Pharma has no effect on the direction of Biocardia i.e., Biocardia and Innate Pharma go up and down completely randomly.
Pair Corralation between Biocardia and Innate Pharma
Given the investment horizon of 90 days Biocardia is expected to under-perform the Innate Pharma. In addition to that, Biocardia is 2.61 times more volatile than Innate Pharma. It trades about -0.02 of its total potential returns per unit of risk. Innate Pharma is currently generating about -0.03 per unit of volatility. If you would invest 350.00 in Innate Pharma on September 2, 2024 and sell it today you would lose (196.00) from holding Innate Pharma or give up 56.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biocardia vs. Innate Pharma
Performance |
| Timeline |
| Biocardia |
| Innate Pharma |
Biocardia and Innate Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biocardia and Innate Pharma
The main advantage of trading using opposite Biocardia and Innate Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biocardia position performs unexpectedly, Innate Pharma 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 Innate Pharma will offset losses from the drop in Innate Pharma's long position.| Biocardia vs. Aerovate Therapeutics | Biocardia vs. Adagene | Biocardia vs. Acrivon Therapeutics, Common | Biocardia vs. Rezolute |
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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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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