Correlation Between 4D Molecular and BioAffinity Technologies
Can any of the company-specific risk be diversified away by investing in both 4D Molecular and BioAffinity Technologies 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 4D Molecular and BioAffinity Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 4D Molecular Therapeutics and bioAffinity Technologies Warrant, you can compare the effects of market volatilities on 4D Molecular and BioAffinity Technologies 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 4D Molecular with a short position of BioAffinity Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4D Molecular and BioAffinity Technologies.
Diversification Opportunities for 4D Molecular and BioAffinity Technologies
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FDMT and BioAffinity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding 4D Molecular Therapeutics and bioAffinity Technologies Warra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAffinity Technologies and 4D Molecular 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 4D Molecular Therapeutics are associated (or correlated) with BioAffinity Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAffinity Technologies has no effect on the direction of 4D Molecular i.e., 4D Molecular and BioAffinity Technologies go up and down completely randomly.
Pair Corralation between 4D Molecular and BioAffinity Technologies
Given the investment horizon of 90 days 4D Molecular Therapeutics is expected to under-perform the BioAffinity Technologies. But the stock apears to be less risky and, when comparing its historical volatility, 4D Molecular Therapeutics is 9.88 times less risky than BioAffinity Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The bioAffinity Technologies Warrant is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 43.00 in bioAffinity Technologies Warrant on September 1, 2024 and sell it today you would earn a total of 29.00 from holding bioAffinity Technologies Warrant or generate 67.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 74.51% |
| Values | Daily Returns |
4D Molecular Therapeutics vs. bioAffinity Technologies Warra
Performance |
| Timeline |
| 4D Molecular Therapeutics |
| BioAffinity Technologies |
4D Molecular and BioAffinity Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4D Molecular and BioAffinity Technologies
The main advantage of trading using opposite 4D Molecular and BioAffinity Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4D Molecular position performs unexpectedly, BioAffinity Technologies 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 BioAffinity Technologies will offset losses from the drop in BioAffinity Technologies' long position.| 4D Molecular vs. Tff Pharmaceuticals | 4D Molecular vs. Eliem Therapeutics | 4D Molecular vs. Inhibrx | 4D Molecular vs. Enliven Therapeutics |
| BioAffinity Technologies vs. bioAffinity Technologies, | BioAffinity Technologies vs. AAP Inc | BioAffinity Technologies vs. Discount Print USA | BioAffinity Technologies vs. China Dongsheng International |
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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