Correlation Between BioLineRx and Verastem
Can any of the company-specific risk be diversified away by investing in both BioLineRx and Verastem 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 BioLineRx and Verastem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioLineRx and Verastem, you can compare the effects of market volatilities on BioLineRx and Verastem 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 BioLineRx with a short position of Verastem. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioLineRx and Verastem.
Diversification Opportunities for BioLineRx and Verastem
Pay attention - limited upside
The 3 months correlation between BioLineRx and Verastem is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BioLineRx and Verastem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verastem and BioLineRx 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 BioLineRx are associated (or correlated) with Verastem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verastem has no effect on the direction of BioLineRx i.e., BioLineRx and Verastem go up and down completely randomly.
Pair Corralation between BioLineRx and Verastem
Given the investment horizon of 90 days BioLineRx is expected to under-perform the Verastem. In addition to that, BioLineRx is 1.92 times more volatile than Verastem. It trades about -0.1 of its total potential returns per unit of risk. Verastem is currently generating about 0.19 per unit of volatility. If you would invest 374.00 in Verastem on August 31, 2024 and sell it today you would earn a total of 83.00 from holding Verastem or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioLineRx vs. Verastem
Performance |
| Timeline |
| BioLineRx |
| Verastem |
BioLineRx and Verastem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioLineRx and Verastem
The main advantage of trading using opposite BioLineRx and Verastem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioLineRx position performs unexpectedly, Verastem 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 Verastem will offset losses from the drop in Verastem's long position.| BioLineRx vs. Ardelyx | BioLineRx vs. Lexicon Pharmaceuticals | BioLineRx vs. Seres Therapeutics | BioLineRx vs. Immunitybio |
| Verastem vs. Cue Biopharma | Verastem vs. Eliem Therapeutics | Verastem vs. Inhibrx | Verastem vs. Molecular Partners AG |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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