Correlation Between BiocardiaInc and Moleculin Biotech

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

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

Diversification Opportunities for BiocardiaInc and Moleculin Biotech

0.6

Correlation Coefficient

BiocardiaInc  Moleculin Biotech

Poor diversification

The 3 months correlation between BiocardiaInc and Moleculin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BiocardiaInc and Moleculin Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moleculin Biotech and BiocardiaInc 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 BiocardiaInc are associated (or correlated) with Moleculin Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moleculin Biotech has no effect on the direction of BiocardiaInc i.e., BiocardiaInc and Moleculin Biotech go up and down completely randomly.

Pair Corralation between BiocardiaInc and Moleculin Biotech

Given the investment horizon of 90 days BiocardiaInc is expected to generate 2.05 times more return on investment than Moleculin Biotech. However, BiocardiaInc is 2.05 times more volatile than Moleculin Biotech. It trades about -0.01 of its potential returns per unit of risk. Moleculin Biotech is currently generating about -0.03 per unit of risk. If you would invest  199.00  in BiocardiaInc on January 26, 2024 and sell it today you would lose (161.00) from holding BiocardiaInc or give up 80.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

BiocardiaInc  vs.  Moleculin Biotech

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.

Moleculin Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moleculin Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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 BiocardiaInc and Moleculin Biotech

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

The idea behind BiocardiaInc and Moleculin Biotech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.