Correlation Between BioXcel Therapeutics and Heron Therapeuti
Can any of the company-specific risk be diversified away by investing in both BioXcel Therapeutics and Heron Therapeuti 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 BioXcel Therapeutics and Heron Therapeuti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioXcel Therapeutics and Heron Therapeuti, you can compare the effects of market volatilities on BioXcel Therapeutics and Heron Therapeuti 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 BioXcel Therapeutics with a short position of Heron Therapeuti. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioXcel Therapeutics and Heron Therapeuti.
Diversification Opportunities for BioXcel Therapeutics and Heron Therapeuti
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between BioXcel and Heron is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BioXcel Therapeutics and Heron Therapeuti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heron Therapeuti and BioXcel 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 BioXcel Therapeutics are associated (or correlated) with Heron Therapeuti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heron Therapeuti has no effect on the direction of BioXcel Therapeutics i.e., BioXcel Therapeutics and Heron Therapeuti go up and down completely randomly.
Pair Corralation between BioXcel Therapeutics and Heron Therapeuti
Given the investment horizon of 90 days BioXcel Therapeutics is expected to generate 0.9 times more return on investment than Heron Therapeuti. However, BioXcel Therapeutics is 1.11 times less risky than Heron Therapeuti. It trades about -0.23 of its potential returns per unit of risk. Heron Therapeuti is currently generating about -0.3 per unit of risk. If you would invest 67.00 in BioXcel Therapeutics on August 29, 2024 and sell it today you would lose (21.00) from holding BioXcel Therapeutics or give up 31.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioXcel Therapeutics vs. Heron Therapeuti
Performance |
| Timeline |
| BioXcel Therapeutics |
| Heron Therapeuti |
BioXcel Therapeutics and Heron Therapeuti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioXcel Therapeutics and Heron Therapeuti
The main advantage of trading using opposite BioXcel Therapeutics and Heron Therapeuti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioXcel Therapeutics position performs unexpectedly, Heron Therapeuti 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 Heron Therapeuti will offset losses from the drop in Heron Therapeuti's long position.| BioXcel Therapeutics vs. Terns Pharmaceuticals | BioXcel Therapeutics vs. Amylyx Pharmaceuticals | BioXcel Therapeutics vs. Acumen Pharmaceuticals | BioXcel Therapeutics vs. Inozyme Pharma |
| Heron Therapeuti vs. Mereo BioPharma Group | Heron Therapeuti vs. Terns Pharmaceuticals | Heron Therapeuti vs. PDS Biotechnology Corp | Heron Therapeuti vs. Inozyme Pharma |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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