Correlation Between BioCardia and Polydex Pharmaceuticals

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

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

Diversification Opportunities for BioCardia and Polydex Pharmaceuticals

-0.42

Correlation Coefficient

BioCardia  Polydex Pharmaceuticals

Very good diversification

The 3 months correlation between BioCardia and Polydex is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BioCardia and Polydex Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polydex 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 Polydex Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polydex Pharmaceuticals has no effect on the direction of BioCardia i.e., BioCardia and Polydex Pharmaceuticals go up and down completely randomly.

Pair Corralation between BioCardia and Polydex Pharmaceuticals

If you would invest  2.61  in BioCardia on October 7, 2024 and sell it today you would lose (2.61) from holding BioCardia or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.2%
Values	Daily Returns

BioCardia  vs.  Polydex Pharmaceuticals

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. In spite of fairly stable basic indicators, BioCardia is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Polydex Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BioCardia and Polydex Pharmaceuticals

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

The idea behind BioCardia and Polydex 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.