Correlation Between BioLineRx and Arrowhead Pharmaceuticals

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

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

Diversification Opportunities for BioLineRx and Arrowhead Pharmaceuticals

0.41

Correlation Coefficient

BioLineRx  Arrowhead Pharmaceuticals

Very weak diversification

The 3 months correlation between BioLineRx and Arrowhead is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BioLineRx and Arrowhead Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Pharmaceuticals and BioLineRx 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 BioLineRx are associated (or correlated) with Arrowhead Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Pharmaceuticals has no effect on the direction of BioLineRx i.e., BioLineRx and Arrowhead Pharmaceuticals go up and down completely randomly.

Pair Corralation between BioLineRx and Arrowhead Pharmaceuticals

Given the investment horizon of 90 days BioLineRx is expected to under-perform the Arrowhead Pharmaceuticals. In addition to that, BioLineRx is 2.4 times more volatile than Arrowhead Pharmaceuticals. It trades about -0.13 of its total potential returns per unit of risk. Arrowhead Pharmaceuticals is currently generating about -0.12 per unit of volatility. If you would invest  1,975  in Arrowhead Pharmaceuticals on December 23, 2024 and sell it today you would lose (495.00) from holding Arrowhead Pharmaceuticals or give up 25.06% of portfolio value over 90 days.

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

BioLineRx  vs.  Arrowhead Pharmaceuticals

BioLineRx

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLineRx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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 current disturbance may also be a sign of long term up-swing for the company investors.

Arrowhead Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arrowhead Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with BioLineRx and Arrowhead Pharmaceuticals

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

The idea behind BioLineRx and Arrowhead 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.