Correlation Between Alligator Bioscience and Infant Bacterial

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

By analyzing existing cross correlation between Alligator Bioscience AB and Infant Bacterial Therapeutics, you can compare the effects of market volatilities on Alligator Bioscience and Infant Bacterial 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 Alligator Bioscience with a short position of Infant Bacterial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alligator Bioscience and Infant Bacterial.

Diversification Opportunities for Alligator Bioscience and Infant Bacterial

0.44

Correlation Coefficient

Alligator Bioscience  Infant Bacterial

Very weak diversification

The 3 months correlation between Alligator and Infant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Bioscience AB and Infant Bacterial Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infant Bacterial and Alligator Bioscience 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 Alligator Bioscience AB are associated (or correlated) with Infant Bacterial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infant Bacterial has no effect on the direction of Alligator Bioscience i.e., Alligator Bioscience and Infant Bacterial go up and down completely randomly.

Pair Corralation between Alligator Bioscience and Infant Bacterial

Assuming the 90 days trading horizon Alligator Bioscience AB is expected to generate 39.63 times more return on investment than Infant Bacterial. However, Alligator Bioscience is 39.63 times more volatile than Infant Bacterial Therapeutics. It trades about 0.14 of its potential returns per unit of risk. Infant Bacterial Therapeutics is currently generating about -0.15 per unit of risk. If you would invest  2.11  in Alligator Bioscience AB on December 30, 2024 and sell it today you would lose (1.40) from holding Alligator Bioscience AB or give up 66.35% of portfolio value over 90 days.

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

Alligator Bioscience AB  vs.  Infant Bacterial Therapeutics

Alligator Bioscience

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alligator Bioscience AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alligator Bioscience unveiled solid returns over the last few months and may actually be approaching a breakup point.

Infant Bacterial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infant Bacterial Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alligator Bioscience and Infant Bacterial

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

The idea behind Alligator Bioscience AB and Infant Bacterial 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.