Correlation Between Moleculin Biotech and Brainstorm Cell

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

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

Diversification Opportunities for Moleculin Biotech and Brainstorm Cell

-0.8

Correlation Coefficient

Moleculin Biotech  Brainstorm Cell

Pay attention - limited upside

The 3 months correlation between Moleculin and Brainstorm is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Moleculin Biotech and Brainstorm Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainstorm Cell Ther and Moleculin 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 Moleculin Biotech are associated (or correlated) with Brainstorm Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainstorm Cell Ther has no effect on the direction of Moleculin Biotech i.e., Moleculin Biotech and Brainstorm Cell go up and down completely randomly.

Pair Corralation between Moleculin Biotech and Brainstorm Cell

Given the investment horizon of 90 days Moleculin Biotech is expected to under-perform the Brainstorm Cell. But the stock apears to be less risky and, when comparing its historical volatility, Moleculin Biotech is 1.64 times less risky than Brainstorm Cell. The stock trades about -0.06 of its potential returns per unit of risk. The Brainstorm Cell Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  226.00  in Brainstorm Cell Therapeutics on January 24, 2024 and sell it today you would lose (172.00) from holding Brainstorm Cell Therapeutics or give up 76.11% of portfolio value over 90 days.

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

Moleculin Biotech  vs.  Brainstorm Cell Therapeutics

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.

Brainstorm Cell Ther

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brainstorm Cell Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Brainstorm Cell demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moleculin Biotech and Brainstorm Cell

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

The idea behind Moleculin Biotech and Brainstorm Cell Therapeutics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.