Correlation Between Biocardia and Unicycive Therapeutics

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

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

Diversification Opportunities for Biocardia and Unicycive Therapeutics

-0.44

Correlation Coefficient

Biocardia  Unicycive Therapeutics

Very good diversification

The 3 months correlation between Biocardia and Unicycive is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Unicycive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicycive 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 Unicycive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicycive Therapeutics has no effect on the direction of Biocardia i.e., Biocardia and Unicycive Therapeutics go up and down completely randomly.

Pair Corralation between Biocardia and Unicycive Therapeutics

Given the investment horizon of 90 days Biocardia is expected to under-perform the Unicycive Therapeutics. In addition to that, Biocardia is 1.08 times more volatile than Unicycive Therapeutics. It trades about -0.02 of its total potential returns per unit of risk. Unicycive Therapeutics is currently generating about 0.04 per unit of volatility. If you would invest  51.00  in Unicycive Therapeutics on October 24, 2024 and sell it today you would earn a total of  11.61  from holding Unicycive Therapeutics or generate 22.76% return on investment over 90 days.

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

Biocardia  vs.  Unicycive 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.

Unicycive Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unicycive Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Unicycive Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biocardia and Unicycive Therapeutics

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

The idea behind Biocardia and Unicycive 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.