Correlation Between DiaMedica Therapeutics and Bicycle Therapeutics
Can any of the company-specific risk be diversified away by investing in both DiaMedica Therapeutics and Bicycle Therapeutics 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 DiaMedica Therapeutics and Bicycle Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiaMedica Therapeutics and Bicycle Therapeutics, you can compare the effects of market volatilities on DiaMedica Therapeutics and Bicycle Therapeutics 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 DiaMedica Therapeutics with a short position of Bicycle Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiaMedica Therapeutics and Bicycle Therapeutics.
Diversification Opportunities for DiaMedica Therapeutics and Bicycle Therapeutics
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DiaMedica and Bicycle is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and Bicycle Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bicycle Therapeutics and DiaMedica 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 DiaMedica Therapeutics are associated (or correlated) with Bicycle Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bicycle Therapeutics has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and Bicycle Therapeutics go up and down completely randomly.
Pair Corralation between DiaMedica Therapeutics and Bicycle Therapeutics
Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 1.74 times more return on investment than Bicycle Therapeutics. However, DiaMedica Therapeutics is 1.74 times more volatile than Bicycle Therapeutics. It trades about 0.23 of its potential returns per unit of risk. Bicycle Therapeutics is currently generating about -0.26 per unit of risk. If you would invest 423.00 in DiaMedica Therapeutics on September 12, 2024 and sell it today you would earn a total of 93.00 from holding DiaMedica Therapeutics or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiaMedica Therapeutics vs. Bicycle Therapeutics
Performance |
| Timeline |
| DiaMedica Therapeutics |
| Bicycle Therapeutics |
DiaMedica Therapeutics and Bicycle Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiaMedica Therapeutics and Bicycle Therapeutics
The main advantage of trading using opposite DiaMedica Therapeutics and Bicycle Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiaMedica Therapeutics position performs unexpectedly, Bicycle Therapeutics 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 Bicycle Therapeutics will offset losses from the drop in Bicycle Therapeutics' long position.| DiaMedica Therapeutics vs. Milestone Pharmaceuticals | DiaMedica Therapeutics vs. Seres Therapeutics | DiaMedica Therapeutics vs. Inhibikase Therapeutics | DiaMedica Therapeutics vs. Oncolytics Biotech |
| Bicycle Therapeutics vs. Equillium | Bicycle Therapeutics vs. DiaMedica Therapeutics | Bicycle Therapeutics vs. Valneva SE ADR | Bicycle Therapeutics vs. Vivani Medical |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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