Correlation Between Brickell Biotech and Briacell Therapeutics

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

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

Diversification Opportunities for Brickell Biotech and Briacell Therapeutics

0.78

Correlation Coefficient

Brickell Biotech  Briacell Therapeutics

Poor diversification

The 3 months correlation between Brickell and Briacell is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Brickell Biotech and Briacell Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Briacell Therapeutics 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 Briacell Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Briacell Therapeutics has no effect on the direction of Brickell Biotech i.e., Brickell Biotech and Briacell Therapeutics go up and down completely randomly.

Pair Corralation between Brickell Biotech and Briacell Therapeutics

Considering the 90-day investment horizon Brickell Biotech is expected to generate 0.37 times more return on investment than Briacell Therapeutics. However, Brickell Biotech is 2.71 times less risky than Briacell Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Briacell Therapeutics Corp is currently generating about -0.11 per unit of risk. If you would invest  88.00  in Brickell Biotech on January 26, 2024 and sell it today you would earn a total of  2.00  from holding Brickell Biotech or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.36%
Values	Daily Returns

Brickell Biotech  vs.  Briacell Therapeutics Corp

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 weak 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.

Briacell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Briacell Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brickell Biotech and Briacell Therapeutics

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

The idea behind Brickell Biotech and Briacell Therapeutics 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.