Correlation Between Biovie and Gain Therapeutics

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

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

Diversification Opportunities for Biovie and Gain Therapeutics

0.47

Correlation Coefficient

Biovie  Gain Therapeutics

Very weak diversification

The 3 months correlation between Biovie and Gain is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Biovie Inc and Gain Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gain Therapeutics and Biovie 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 Biovie Inc are associated (or correlated) with Gain Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gain Therapeutics has no effect on the direction of Biovie i.e., Biovie and Gain Therapeutics go up and down completely randomly.

Pair Corralation between Biovie and Gain Therapeutics

Given the investment horizon of 90 days Biovie Inc is expected to under-perform the Gain Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Biovie Inc is 1.03 times less risky than Gain Therapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The Gain Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Gain Therapeutics on December 28, 2024 and sell it today you would lose (11.00) from holding Gain Therapeutics or give up 5.05% of portfolio value over 90 days.

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

Biovie Inc  vs.  Gain Therapeutics

Biovie Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biovie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Gain Therapeutics

Risk-Adjusted Performance

Modest

Over the last 90 days Gain Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gain Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biovie and Gain Therapeutics

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

The idea behind Biovie Inc and Gain 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.