Correlation Between Tempest Therapeutics and BioXcel Therapeutics
Can any of the company-specific risk be diversified away by investing in both Tempest Therapeutics and BioXcel 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 Tempest Therapeutics and BioXcel Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tempest Therapeutics and BioXcel Therapeutics, you can compare the effects of market volatilities on Tempest Therapeutics and BioXcel 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 Tempest Therapeutics with a short position of BioXcel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempest Therapeutics and BioXcel Therapeutics.
Diversification Opportunities for Tempest Therapeutics and BioXcel Therapeutics
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tempest and BioXcel is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tempest Therapeutics and BioXcel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioXcel Therapeutics and Tempest 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 Tempest Therapeutics are associated (or correlated) with BioXcel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioXcel Therapeutics has no effect on the direction of Tempest Therapeutics i.e., Tempest Therapeutics and BioXcel Therapeutics go up and down completely randomly.
Pair Corralation between Tempest Therapeutics and BioXcel Therapeutics
Given the investment horizon of 90 days Tempest Therapeutics is expected to under-perform the BioXcel Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Tempest Therapeutics is 1.42 times less risky than BioXcel Therapeutics. The stock trades about -0.12 of its potential returns per unit of risk. The BioXcel Therapeutics is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 60.00 in BioXcel Therapeutics on August 25, 2024 and sell it today you would lose (9.00) from holding BioXcel Therapeutics or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tempest Therapeutics vs. BioXcel Therapeutics
Performance |
| Timeline |
| Tempest Therapeutics |
| BioXcel Therapeutics |
Tempest Therapeutics and BioXcel Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempest Therapeutics and BioXcel Therapeutics
The main advantage of trading using opposite Tempest Therapeutics and BioXcel Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempest Therapeutics position performs unexpectedly, BioXcel 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 BioXcel Therapeutics will offset losses from the drop in BioXcel Therapeutics' long position.| Tempest Therapeutics vs. Eliem Therapeutics | Tempest Therapeutics vs. HCW Biologics | Tempest Therapeutics vs. RenovoRx | Tempest Therapeutics vs. Scpharmaceuticals |
| BioXcel Therapeutics vs. Eliem Therapeutics | BioXcel Therapeutics vs. HCW Biologics | BioXcel Therapeutics vs. RenovoRx | BioXcel Therapeutics vs. Scpharmaceuticals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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