Correlation Between Armata Pharmaceuticals and Biocardia

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

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

Diversification Opportunities for Armata Pharmaceuticals and Biocardia

0.48

Correlation Coefficient

Armata Pharmaceuticals  Biocardia

Very weak diversification

The 3 months correlation between Armata and Biocardia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Armata 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 Armata Pharmaceuticals 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 Armata Pharmaceuticals i.e., Armata Pharmaceuticals and Biocardia go up and down completely randomly.

Pair Corralation between Armata Pharmaceuticals and Biocardia

Given the investment horizon of 90 days Armata Pharmaceuticals is expected to generate 0.61 times more return on investment than Biocardia. However, Armata Pharmaceuticals is 1.63 times less risky than Biocardia. It trades about 0.02 of its potential returns per unit of risk. Biocardia is currently generating about -0.02 per unit of risk. If you would invest  300.00  in Armata Pharmaceuticals on October 24, 2024 and sell it today you would lose (81.00) from holding Armata Pharmaceuticals or give up 27.0% of portfolio value over 90 days.

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

Armata Pharmaceuticals  vs.  Biocardia

Armata Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armata Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Armata Pharmaceuticals is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Biocardia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armata Pharmaceuticals and Biocardia

The main advantage of trading using opposite Armata Pharmaceuticals and Biocardia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armata Pharmaceuticals 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 Armata Pharmaceuticals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.