Correlation Between HCW Biologics and Journey Medical

Can any of the company-specific risk be diversified away by investing in both HCW Biologics and Journey Medical 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 HCW Biologics and Journey Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HCW Biologics and Journey Medical Corp, you can compare the effects of market volatilities on HCW Biologics and Journey Medical 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 HCW Biologics with a short position of Journey Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCW Biologics and Journey Medical.

Diversification Opportunities for HCW Biologics and Journey Medical

-0.42

Correlation Coefficient

HCW Biologics  Journey Medical

Very good diversification

The 3 months correlation between HCW and Journey is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HCW Biologics and Journey Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Medical Corp and HCW Biologics 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 HCW Biologics are associated (or correlated) with Journey Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Medical Corp has no effect on the direction of HCW Biologics i.e., HCW Biologics and Journey Medical go up and down completely randomly.

Pair Corralation between HCW Biologics and Journey Medical

Given the investment horizon of 90 days HCW Biologics is expected to generate 0.65 times more return on investment than Journey Medical. However, HCW Biologics is 1.53 times less risky than Journey Medical. It trades about 0.04 of its potential returns per unit of risk. Journey Medical Corp is currently generating about -0.04 per unit of risk. If you would invest  113.00  in HCW Biologics on February 10, 2024 and sell it today you would earn a total of  7.00  from holding HCW Biologics or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

HCW Biologics  vs.  Journey Medical Corp

HCW Biologics

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HCW Biologics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HCW Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Journey Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HCW Biologics and Journey Medical

The main advantage of trading using opposite HCW Biologics and Journey Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCW Biologics position performs unexpectedly, Journey Medical 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 Journey Medical will offset losses from the drop in Journey Medical's long position.

The idea behind HCW Biologics and Journey Medical Corp 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.