Correlation Between Bullfrog and Dermata Therapeutics

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

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

Diversification Opportunities for Bullfrog and Dermata Therapeutics

0.66

Correlation Coefficient

Bullfrog  Dermata Therapeutics

Poor diversification

The 3 months correlation between Bullfrog and Dermata is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bullfrog AI Holdings, and Dermata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermata Therapeutics and Bullfrog 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 Bullfrog AI Holdings, are associated (or correlated) with Dermata Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermata Therapeutics has no effect on the direction of Bullfrog i.e., Bullfrog and Dermata Therapeutics go up and down completely randomly.

Pair Corralation between Bullfrog and Dermata Therapeutics

Given the investment horizon of 90 days Bullfrog AI Holdings, is expected to generate 4.87 times more return on investment than Dermata Therapeutics. However, Bullfrog is 4.87 times more volatile than Dermata Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Dermata Therapeutics is currently generating about -0.05 per unit of risk. If you would invest  0.00  in Bullfrog AI Holdings, on September 28, 2024 and sell it today you would earn a total of  229.00  from holding Bullfrog AI Holdings, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.58%
Values	Daily Returns

Bullfrog AI Holdings,  vs.  Dermata Therapeutics

Bullfrog AI Holdings,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bullfrog AI Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dermata Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dermata Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bullfrog and Dermata Therapeutics

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

The idea behind Bullfrog AI Holdings, and Dermata 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..