Correlation Between Connect Biopharma and Biofrontera
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma 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 Connect Biopharma and Biofrontera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Biofrontera, you can compare the effects of market volatilities on Connect Biopharma 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 Connect Biopharma with a short position of Biofrontera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Biofrontera.
Diversification Opportunities for Connect Biopharma and Biofrontera
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Connect and Biofrontera is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Connect Biopharma 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 Connect Biopharma Holdings 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 Connect Biopharma i.e., Connect Biopharma and Biofrontera go up and down completely randomly.
Pair Corralation between Connect Biopharma and Biofrontera
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to generate 0.81 times more return on investment than Biofrontera. However, Connect Biopharma Holdings is 1.23 times less risky than Biofrontera. It trades about 0.05 of its potential returns per unit of risk. Biofrontera is currently generating about -0.01 per unit of risk. If you would invest 90.00 in Connect Biopharma Holdings on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Connect Biopharma Holdings or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Biofrontera
Performance |
| Timeline |
| Connect Biopharma |
| Biofrontera |
Connect Biopharma and Biofrontera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Biofrontera
The main advantage of trading using opposite Connect Biopharma and Biofrontera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma 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.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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