Correlation Between Bionoid Pharma and CTT Pharmaceutical

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

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

Diversification Opportunities for Bionoid Pharma and CTT Pharmaceutical

-0.02

Correlation Coefficient

Bionoid Pharma  CTT Pharmaceutical

Good diversification

The 3 months correlation between Bionoid and CTT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bionoid Pharma and CTT Pharmaceutical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Pharmaceutical and Bionoid Pharma 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 Bionoid Pharma are associated (or correlated) with CTT Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Pharmaceutical has no effect on the direction of Bionoid Pharma i.e., Bionoid Pharma and CTT Pharmaceutical go up and down completely randomly.

Pair Corralation between Bionoid Pharma and CTT Pharmaceutical

Given the investment horizon of 90 days Bionoid Pharma is expected to generate 0.78 times more return on investment than CTT Pharmaceutical. However, Bionoid Pharma is 1.28 times less risky than CTT Pharmaceutical. It trades about 0.11 of its potential returns per unit of risk. CTT Pharmaceutical Holdings is currently generating about 0.06 per unit of risk. If you would invest  20.00  in Bionoid Pharma on September 13, 2024 and sell it today you would earn a total of  7.00  from holding Bionoid Pharma or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Bionoid Pharma  vs.  CTT Pharmaceutical Holdings

Bionoid Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bionoid Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bionoid Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

CTT Pharmaceutical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Pharmaceutical Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CTT Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bionoid Pharma and CTT Pharmaceutical

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

The idea behind Bionoid Pharma and CTT Pharmaceutical Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.