Correlation Between Bioatla and Adagene

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

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

Diversification Opportunities for Bioatla and Adagene

0.62

Correlation Coefficient

Bioatla  Adagene

Poor diversification

The 3 months correlation between Bioatla and Adagene is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bioatla and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Bioatla 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 Bioatla are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Bioatla i.e., Bioatla and Adagene go up and down completely randomly.

Pair Corralation between Bioatla and Adagene

Given the investment horizon of 90 days Bioatla is expected to under-perform the Adagene. In addition to that, Bioatla is 1.34 times more volatile than Adagene. It trades about -0.41 of its total potential returns per unit of risk. Adagene is currently generating about -0.01 per unit of volatility. If you would invest  219.00  in Adagene on October 5, 2024 and sell it today you would lose (13.00) from holding Adagene or give up 5.94% of portfolio value over 90 days.

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

Bioatla  vs.  Adagene

Bioatla

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioatla has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bioatla and Adagene

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

The idea behind Bioatla and Adagene 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.