Correlation Between Hepion Pharmaceuticals and VectivBio Holding
Can any of the company-specific risk be diversified away by investing in both Hepion Pharmaceuticals and VectivBio Holding 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 Hepion Pharmaceuticals and VectivBio Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hepion Pharmaceuticals and VectivBio Holding AG, you can compare the effects of market volatilities on Hepion Pharmaceuticals and VectivBio Holding 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 Hepion Pharmaceuticals with a short position of VectivBio Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hepion Pharmaceuticals and VectivBio Holding.
Diversification Opportunities for Hepion Pharmaceuticals and VectivBio Holding
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hepion and VectivBio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hepion Pharmaceuticals and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding and Hepion Pharmaceuticals 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 Hepion Pharmaceuticals are associated (or correlated) with VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Hepion Pharmaceuticals i.e., Hepion Pharmaceuticals and VectivBio Holding go up and down completely randomly.
Pair Corralation between Hepion Pharmaceuticals and VectivBio Holding
Given the investment horizon of 90 days Hepion Pharmaceuticals is expected to under-perform the VectivBio Holding. In addition to that, Hepion Pharmaceuticals is 2.13 times more volatile than VectivBio Holding AG. It trades about -0.02 of its total potential returns per unit of risk. VectivBio Holding AG is currently generating about 0.14 per unit of volatility. If you would invest 822.00 in VectivBio Holding AG on August 23, 2024 and sell it today you would earn a total of 863.00 from holding VectivBio Holding AG or generate 104.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.44% |
| Values | Daily Returns |
Hepion Pharmaceuticals vs. VectivBio Holding AG
Performance |
| Timeline |
| Hepion Pharmaceuticals |
| VectivBio Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hepion Pharmaceuticals and VectivBio Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hepion Pharmaceuticals and VectivBio Holding
The main advantage of trading using opposite Hepion Pharmaceuticals and VectivBio Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hepion Pharmaceuticals position performs unexpectedly, VectivBio Holding 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 VectivBio Holding will offset losses from the drop in VectivBio Holding's long position.The idea behind Hepion Pharmaceuticals and VectivBio Holding AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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