Correlation Between Biofrontera and Mustang Bio
Can any of the company-specific risk be diversified away by investing in both Biofrontera and Mustang Bio 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 Biofrontera and Mustang Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biofrontera and Mustang Bio, you can compare the effects of market volatilities on Biofrontera and Mustang Bio 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 Biofrontera with a short position of Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofrontera and Mustang Bio.
Diversification Opportunities for Biofrontera and Mustang Bio
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biofrontera and Mustang is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Biofrontera and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio and Biofrontera 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 Biofrontera are associated (or correlated) with Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Biofrontera i.e., Biofrontera and Mustang Bio go up and down completely randomly.
Pair Corralation between Biofrontera and Mustang Bio
Given the investment horizon of 90 days Biofrontera is expected to generate 0.48 times more return on investment than Mustang Bio. However, Biofrontera is 2.09 times less risky than Mustang Bio. It trades about -0.31 of its potential returns per unit of risk. Mustang Bio is currently generating about -0.5 per unit of risk. If you would invest 112.00 in Biofrontera on December 4, 2024 and sell it today you would lose (25.00) from holding Biofrontera or give up 22.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Biofrontera vs. Mustang Bio
Performance |
| Timeline |
| Biofrontera |
| Mustang Bio |
Biofrontera and Mustang Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biofrontera and Mustang Bio
The main advantage of trading using opposite Biofrontera and Mustang Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biofrontera position performs unexpectedly, Mustang Bio 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 Mustang Bio will offset losses from the drop in Mustang Bio's long position.| Biofrontera vs. Shuttle Pharmaceuticals | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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