Correlation Between BioXcel Therapeutics and Hepion Pharmaceuticals

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

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

Diversification Opportunities for BioXcel Therapeutics and Hepion Pharmaceuticals

0.83

Correlation Coefficient

BioXcel Therapeutics  Hepion Pharmaceuticals

Very poor diversification

The 3 months correlation between BioXcel and Hepion is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BioXcel Therapeutics and Hepion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hepion Pharmaceuticals and BioXcel Therapeutics 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 BioXcel Therapeutics are associated (or correlated) with Hepion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hepion Pharmaceuticals has no effect on the direction of BioXcel Therapeutics i.e., BioXcel Therapeutics and Hepion Pharmaceuticals go up and down completely randomly.

Pair Corralation between BioXcel Therapeutics and Hepion Pharmaceuticals

Given the investment horizon of 90 days BioXcel Therapeutics is expected to generate 0.93 times more return on investment than Hepion Pharmaceuticals. However, BioXcel Therapeutics is 1.08 times less risky than Hepion Pharmaceuticals. It trades about -0.05 of its potential returns per unit of risk. Hepion Pharmaceuticals is currently generating about -0.26 per unit of risk. If you would invest  587.00  in BioXcel Therapeutics on December 29, 2024 and sell it today you would lose (375.00) from holding BioXcel Therapeutics or give up 63.88% of portfolio value over 90 days.

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

BioXcel Therapeutics  vs.  Hepion Pharmaceuticals

BioXcel Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioXcel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Hepion Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hepion Pharmaceuticals 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 somewhat 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.

Pair Trading with BioXcel Therapeutics and Hepion Pharmaceuticals

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

The idea behind BioXcel Therapeutics and Hepion 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.