Correlation Between Biocardia and Armata Pharmaceuticals

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

By analyzing existing cross correlation between Biocardia and Armata Pharmaceuticals, you can compare the effects of market volatilities on Biocardia and Armata Pharmaceuticals 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 Armata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biocardia and Armata Pharmaceuticals.

Diversification Opportunities for Biocardia and Armata Pharmaceuticals

-0.29

Correlation Coefficient

Biocardia  Armata Pharmaceuticals

Very good diversification

The 3 months correlation between Biocardia and Armata is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Armata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armata Pharmaceuticals 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 Armata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armata Pharmaceuticals has no effect on the direction of Biocardia i.e., Biocardia and Armata Pharmaceuticals go up and down completely randomly.

Pair Corralation between Biocardia and Armata Pharmaceuticals

Given the investment horizon of 90 days Biocardia is expected to generate 1.74 times more return on investment than Armata Pharmaceuticals. However, Biocardia is 1.74 times more volatile than Armata Pharmaceuticals. It trades about 0.09 of its potential returns per unit of risk. Armata Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  201.00  in Biocardia on December 21, 2024 and sell it today you would earn a total of  46.00  from holding Biocardia or generate 22.89% return on investment over 90 days.

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

Biocardia  vs.  Armata Pharmaceuticals

Biocardia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Biocardia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Biocardia sustained solid returns over the last few months and may actually be approaching a breakup point.

Armata Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Armata Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Armata Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Biocardia and Armata Pharmaceuticals

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

The idea behind Biocardia and Armata Pharmaceuticals 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 Anywhere module to track or share privately all of your investments from the convenience of any device.