Correlation Between Aytu BioScience and Ibio

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

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

Diversification Opportunities for Aytu BioScience and Ibio

-0.34

Correlation Coefficient

Aytu BioScience  Ibio

Very good diversification

The 3 months correlation between Aytu and Ibio is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aytu BioScience and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc and Aytu 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 Aytu BioScience are associated (or correlated) with Ibio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibio Inc has no effect on the direction of Aytu BioScience i.e., Aytu BioScience and Ibio go up and down completely randomly.

Pair Corralation between Aytu BioScience and Ibio

Given the investment horizon of 90 days Aytu BioScience is expected to under-perform the Ibio. But the stock apears to be less risky and, when comparing its historical volatility, Aytu BioScience is 2.4 times less risky than Ibio. The stock trades about -0.01 of its potential returns per unit of risk. The Ibio Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Ibio Inc on December 2, 2024 and sell it today you would lose (3,117) from holding Ibio Inc or give up 84.24% of portfolio value over 90 days.

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

Aytu BioScience  vs.  Ibio Inc

Aytu BioScience

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aytu BioScience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Ibio Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aytu BioScience and Ibio

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

The idea behind Aytu BioScience and Ibio Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.