Correlation Between Benitec Biopharma and Histogen

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

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

Diversification Opportunities for Benitec Biopharma and Histogen

-0.23

Correlation Coefficient

Benitec Biopharma  Histogen

Very good diversification

The 3 months correlation between Benitec and Histogen is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Benitec Biopharma Ltd and Histogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histogen and Benitec Biopharma 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 Benitec Biopharma Ltd are associated (or correlated) with Histogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histogen has no effect on the direction of Benitec Biopharma i.e., Benitec Biopharma and Histogen go up and down completely randomly.

Pair Corralation between Benitec Biopharma and Histogen

Given the investment horizon of 90 days Benitec Biopharma is expected to generate 1.21 times less return on investment than Histogen. In addition to that, Benitec Biopharma is 1.12 times more volatile than Histogen. It trades about 0.05 of its total potential returns per unit of risk. Histogen is currently generating about 0.06 per unit of volatility. If you would invest  2.60  in Histogen on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Histogen or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.79%
Values	Daily Returns

Benitec Biopharma Ltd  vs.  Histogen

Benitec Biopharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Histogen

Risk-Adjusted Performance

Modest

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Histogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benitec Biopharma and Histogen

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

The idea behind Benitec Biopharma Ltd and Histogen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.