Correlation Between Applied Molecular and Biocardia

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

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

Diversification Opportunities for Applied Molecular and Biocardia

0.0

Correlation Coefficient

Applied Molecular  Biocardia

Pay attention - limited upside

The 3 months correlation between Applied and Biocardia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Molecular Transport and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Applied Molecular 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 Applied Molecular Transport are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Applied Molecular i.e., Applied Molecular and Biocardia go up and down completely randomly.

Pair Corralation between Applied Molecular and Biocardia

If you would invest  201.00  in Biocardia on December 21, 2024 and sell it today you would earn a total of  65.00  from holding Biocardia or generate 32.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Applied Molecular Transport  vs.  Biocardia

Applied Molecular

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Molecular Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Applied Molecular is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Biocardia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Biocardia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Biocardia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Molecular and Biocardia

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

The idea behind Applied Molecular Transport and Biocardia 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 Transaction History module to view history of all your transactions and understand their impact on performance.