Correlation Between CannBioRx Life and BriaCell Therapeutics

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

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

Diversification Opportunities for CannBioRx Life and BriaCell Therapeutics

0.25

Correlation Coefficient

CannBioRx Life  BriaCell Therapeutics

Modest diversification

The 3 months correlation between CannBioRx and BriaCell is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CannBioRx Life Sciences and BriaCell Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BriaCell Therapeutics and CannBioRx Life 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 CannBioRx Life Sciences are associated (or correlated) with BriaCell Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BriaCell Therapeutics has no effect on the direction of CannBioRx Life i.e., CannBioRx Life and BriaCell Therapeutics go up and down completely randomly.

Pair Corralation between CannBioRx Life and BriaCell Therapeutics

Assuming the 90 days horizon CannBioRx Life is expected to generate 1.34 times less return on investment than BriaCell Therapeutics. In addition to that, CannBioRx Life is 1.75 times more volatile than BriaCell Therapeutics Corp. It trades about 0.07 of its total potential returns per unit of risk. BriaCell Therapeutics Corp is currently generating about 0.16 per unit of volatility. If you would invest  21.00  in BriaCell Therapeutics Corp on September 3, 2024 and sell it today you would earn a total of  22.00  from holding BriaCell Therapeutics Corp or generate 104.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

CannBioRx Life Sciences  vs.  BriaCell Therapeutics Corp

CannBioRx Life Sciences

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CannBioRx Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, CannBioRx Life showed solid returns over the last few months and may actually be approaching a breakup point.

BriaCell Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BriaCell Therapeutics Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BriaCell Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CannBioRx Life and BriaCell Therapeutics

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

The idea behind CannBioRx Life Sciences and BriaCell Therapeutics Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.