Correlation Between Journey Medical and Biofrontera

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

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

Diversification Opportunities for Journey Medical and Biofrontera

-0.06

Correlation Coefficient

Journey Medical  Biofrontera

Good diversification

The 3 months correlation between Journey and Biofrontera is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Journey Medical Corp and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Journey Medical 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 Journey Medical Corp are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of Journey Medical i.e., Journey Medical and Biofrontera go up and down completely randomly.

Pair Corralation between Journey Medical and Biofrontera

Given the investment horizon of 90 days Journey Medical is expected to generate 4.07 times less return on investment than Biofrontera. But when comparing it to its historical volatility, Journey Medical Corp is 1.28 times less risky than Biofrontera. It trades about 0.01 of its potential returns per unit of risk. Biofrontera is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Biofrontera on February 20, 2024 and sell it today you would lose (15.00) from holding Biofrontera or give up 12.0% of portfolio value over 90 days.

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

Journey Medical Corp  vs.  Biofrontera

Journey Medical Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Journey Medical Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Journey Medical may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Biofrontera

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Journey Medical and Biofrontera

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

The idea behind Journey Medical Corp and Biofrontera 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.