Correlation Between Milestone Pharmaceuticals and Bolt Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Milestone Pharmaceuticals and Bolt Biotherapeutics 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 Milestone Pharmaceuticals and Bolt Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Milestone Pharmaceuticals and Bolt Biotherapeutics, you can compare the effects of market volatilities on Milestone Pharmaceuticals and Bolt Biotherapeutics 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 Milestone Pharmaceuticals with a short position of Bolt Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Milestone Pharmaceuticals and Bolt Biotherapeutics.
Diversification Opportunities for Milestone Pharmaceuticals and Bolt Biotherapeutics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Milestone and Bolt is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Milestone Pharmaceuticals and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Milestone 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 Milestone Pharmaceuticals are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Milestone Pharmaceuticals i.e., Milestone Pharmaceuticals and Bolt Biotherapeutics go up and down completely randomly.
Pair Corralation between Milestone Pharmaceuticals and Bolt Biotherapeutics
Given the investment horizon of 90 days Milestone Pharmaceuticals is expected to generate 1.48 times more return on investment than Bolt Biotherapeutics. However, Milestone Pharmaceuticals is 1.48 times more volatile than Bolt Biotherapeutics. It trades about 0.3 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.08 per unit of risk. If you would invest 143.00 in Milestone Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of 44.00 from holding Milestone Pharmaceuticals or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Milestone Pharmaceuticals vs. Bolt Biotherapeutics
Performance |
| Timeline |
| Milestone Pharmaceuticals |
| Bolt Biotherapeutics |
Milestone Pharmaceuticals and Bolt Biotherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Milestone Pharmaceuticals and Bolt Biotherapeutics
The main advantage of trading using opposite Milestone Pharmaceuticals and Bolt Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Milestone Pharmaceuticals position performs unexpectedly, Bolt Biotherapeutics 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 Bolt Biotherapeutics will offset losses from the drop in Bolt Biotherapeutics' long position.The idea behind Milestone Pharmaceuticals and Bolt Biotherapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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