Correlation Between BriaCell Therapeutics and Biofrontera Warrants

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

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

Diversification Opportunities for BriaCell Therapeutics and Biofrontera Warrants

0.42

Correlation Coefficient

BriaCell Therapeutics  Biofrontera Warrants

Very weak diversification

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

Pair Corralation between BriaCell Therapeutics and Biofrontera Warrants

Assuming the 90 days horizon BriaCell Therapeutics is expected to generate 5.77 times less return on investment than Biofrontera Warrants. But when comparing it to its historical volatility, BriaCell Therapeutics Corp is 1.39 times less risky than Biofrontera Warrants. It trades about 0.05 of its potential returns per unit of risk. Biofrontera Warrants is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5.15  in Biofrontera Warrants on September 20, 2024 and sell it today you would earn a total of  3.85  from holding Biofrontera Warrants or generate 74.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

BriaCell Therapeutics Corp  vs.  Biofrontera Warrants

BriaCell Therapeutics

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BriaCell Therapeutics Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BriaCell Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Biofrontera Warrants

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera Warrants are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Biofrontera Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BriaCell Therapeutics and Biofrontera Warrants

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

The idea behind BriaCell Therapeutics Corp and Biofrontera Warrants 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.