Correlation Between Aslan Pharmaceuticals and BiocardiaInc

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

By analyzing existing cross correlation between Aslan Pharmaceuticals Ltd and BiocardiaInc, you can compare the effects of market volatilities on Aslan Pharmaceuticals and BiocardiaInc 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 Aslan Pharmaceuticals with a short position of BiocardiaInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aslan Pharmaceuticals and BiocardiaInc.

Diversification Opportunities for Aslan Pharmaceuticals and BiocardiaInc

0.15

Correlation Coefficient

Aslan Pharmaceuticals  BiocardiaInc

Average diversification

The 3 months correlation between Aslan and BiocardiaInc is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aslan Pharmaceuticals Ltd and BiocardiaInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BiocardiaInc and Aslan 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 Aslan Pharmaceuticals Ltd are associated (or correlated) with BiocardiaInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BiocardiaInc has no effect on the direction of Aslan Pharmaceuticals i.e., Aslan Pharmaceuticals and BiocardiaInc go up and down completely randomly.

Pair Corralation between Aslan Pharmaceuticals and BiocardiaInc

Given the investment horizon of 90 days Aslan Pharmaceuticals Ltd is expected to under-perform the BiocardiaInc. In addition to that, Aslan Pharmaceuticals is 1.83 times more volatile than BiocardiaInc. It trades about -0.27 of its total potential returns per unit of risk. BiocardiaInc is currently generating about -0.16 per unit of volatility. If you would invest  42.00  in BiocardiaInc on January 26, 2024 and sell it today you would lose (4.00) from holding BiocardiaInc or give up 9.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aslan Pharmaceuticals Ltd  vs.  BiocardiaInc

Aslan Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aslan Pharmaceuticals Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Aslan Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

BiocardiaInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BiocardiaInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aslan Pharmaceuticals and BiocardiaInc

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

The idea behind Aslan Pharmaceuticals Ltd and BiocardiaInc 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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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.