Correlation Between Brickell Biotech and BioatlaInc

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

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

Diversification Opportunities for Brickell Biotech and BioatlaInc

-0.52

Correlation Coefficient

Brickell Biotech  BioatlaInc

Excellent diversification

The 3 months correlation between Brickell and BioatlaInc is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brickell Biotech and BioatlaInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioatlaInc and Brickell Biotech 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 Brickell Biotech are associated (or correlated) with BioatlaInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioatlaInc has no effect on the direction of Brickell Biotech i.e., Brickell Biotech and BioatlaInc go up and down completely randomly.

Pair Corralation between Brickell Biotech and BioatlaInc

Considering the 90-day investment horizon Brickell Biotech is expected to under-perform the BioatlaInc. But the stock apears to be less risky and, when comparing its historical volatility, Brickell Biotech is 1.0 times less risky than BioatlaInc. The stock trades about -0.01 of its potential returns per unit of risk. The BioatlaInc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  298.00  in BioatlaInc on January 24, 2024 and sell it today you would lose (74.00) from holding BioatlaInc or give up 24.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.66%
Values	Daily Returns

Brickell Biotech  vs.  BioatlaInc

Brickell Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

BioatlaInc

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Brickell Biotech and BioatlaInc

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

The idea behind Brickell Biotech and BioatlaInc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..