Correlation Between Bolt Biotherapeutics and X4 Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Bolt Biotherapeutics and X4 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 Bolt Biotherapeutics and X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bolt Biotherapeutics and X4 Pharmaceuticals, you can compare the effects of market volatilities on Bolt Biotherapeutics and X4 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 Bolt Biotherapeutics with a short position of X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolt Biotherapeutics and X4 Pharmaceuticals.

Diversification Opportunities for Bolt Biotherapeutics and X4 Pharmaceuticals

-0.27

Correlation Coefficient

Bolt Biotherapeutics  X4 Pharmaceuticals

Very good diversification

The 3 months correlation between Bolt and XFOR is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bolt Biotherapeutics and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals and Bolt Biotherapeutics 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 Bolt Biotherapeutics are associated (or correlated) with X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Bolt Biotherapeutics i.e., Bolt Biotherapeutics and X4 Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bolt Biotherapeutics and X4 Pharmaceuticals

Given the investment horizon of 90 days Bolt Biotherapeutics is expected to generate 0.34 times more return on investment than X4 Pharmaceuticals. However, Bolt Biotherapeutics is 2.91 times less risky than X4 Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  51.00  in Bolt Biotherapeutics on October 22, 2024 and sell it today you would earn a total of  0.30  from holding Bolt Biotherapeutics or generate 0.59% return on investment over 90 days.

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

Bolt Biotherapeutics  vs.  X4 Pharmaceuticals

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

X4 Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bolt Biotherapeutics and X4 Pharmaceuticals

The main advantage of trading using opposite Bolt Biotherapeutics and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolt Biotherapeutics position performs unexpectedly, X4 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.

The idea behind Bolt Biotherapeutics and X4 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.