Correlation Between Biocardia and Addex Therapeutics

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

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

Diversification Opportunities for Biocardia and Addex Therapeutics

0.67

Correlation Coefficient

Biocardia  Addex Therapeutics

Poor diversification

The 3 months correlation between Biocardia and Addex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Addex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addex Therapeutics and Biocardia 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 Biocardia are associated (or correlated) with Addex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addex Therapeutics has no effect on the direction of Biocardia i.e., Biocardia and Addex Therapeutics go up and down completely randomly.

Pair Corralation between Biocardia and Addex Therapeutics

Given the investment horizon of 90 days Biocardia is expected to generate 1.24 times less return on investment than Addex Therapeutics. In addition to that, Biocardia is 1.05 times more volatile than Addex Therapeutics. It trades about 0.05 of its total potential returns per unit of risk. Addex Therapeutics is currently generating about 0.07 per unit of volatility. If you would invest  782.00  in Addex Therapeutics on October 9, 2024 and sell it today you would earn a total of  38.00  from holding Addex Therapeutics or generate 4.86% return on investment over 90 days.

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

Biocardia  vs.  Addex Therapeutics

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Biocardia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Addex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addex 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Biocardia and Addex Therapeutics

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

The idea behind Biocardia and Addex 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.