Correlation Between Bioatla and Trevi Therapeutics

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

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

Diversification Opportunities for Bioatla and Trevi Therapeutics

-0.43

Correlation Coefficient

Bioatla  Trevi Therapeutics

Very good diversification

The 3 months correlation between Bioatla and Trevi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bioatla and Trevi Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trevi Therapeutics 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 Trevi Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trevi Therapeutics has no effect on the direction of Bioatla i.e., Bioatla and Trevi Therapeutics go up and down completely randomly.

Pair Corralation between Bioatla and Trevi Therapeutics

Given the investment horizon of 90 days Bioatla is expected to under-perform the Trevi Therapeutics. In addition to that, Bioatla is 1.24 times more volatile than Trevi Therapeutics. It trades about -0.2 of its total potential returns per unit of risk. Trevi Therapeutics is currently generating about 0.16 per unit of volatility. If you would invest  415.00  in Trevi Therapeutics on December 19, 2024 and sell it today you would earn a total of  266.00  from holding Trevi Therapeutics or generate 64.1% return on investment over 90 days.

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

Bioatla  vs.  Trevi Therapeutics

Bioatla

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trevi Therapeutics

Risk-Adjusted Performance

Good

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

Pair Trading with Bioatla and Trevi Therapeutics

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

The idea behind Bioatla and Trevi 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.