Correlation Between BioCryst Pharmaceuticals and Mind MedicineInc

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

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

Diversification Opportunities for BioCryst Pharmaceuticals and Mind MedicineInc

-0.73

Correlation Coefficient

BioCryst Pharmaceuticals  Mind MedicineInc

Pay attention - limited upside

The 3 months correlation between BioCryst and Mind is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BioCryst Pharmaceuticals and Mind MedicineInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind MedicineInc and BioCryst 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 BioCryst Pharmaceuticals are associated (or correlated) with Mind MedicineInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind MedicineInc has no effect on the direction of BioCryst Pharmaceuticals i.e., BioCryst Pharmaceuticals and Mind MedicineInc go up and down completely randomly.

Pair Corralation between BioCryst Pharmaceuticals and Mind MedicineInc

Given the investment horizon of 90 days BioCryst Pharmaceuticals is expected to under-perform the Mind MedicineInc. But the stock apears to be less risky and, when comparing its historical volatility, BioCryst Pharmaceuticals is 2.43 times less risky than Mind MedicineInc. The stock trades about -0.08 of its potential returns per unit of risk. The Mind MedicineInc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Mind MedicineInc on January 25, 2024 and sell it today you would earn a total of  522.00  from holding Mind MedicineInc or generate 143.01% return on investment over 90 days.

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

BioCryst Pharmaceuticals  vs.  Mind MedicineInc

BioCryst Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioCryst Pharmaceuticals 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.

Mind MedicineInc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mind MedicineInc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Mind MedicineInc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioCryst Pharmaceuticals and Mind MedicineInc

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

The idea behind BioCryst Pharmaceuticals and Mind MedicineInc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.