Correlation Between BeyondSpring and Fulcrum Therapeutics

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

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

Diversification Opportunities for BeyondSpring and Fulcrum Therapeutics

-0.48

Correlation Coefficient

BeyondSpring  Fulcrum Therapeutics

Very good diversification

The 3 months correlation between BeyondSpring and Fulcrum is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BeyondSpring and Fulcrum Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Therapeutics and BeyondSpring 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 BeyondSpring are associated (or correlated) with Fulcrum Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Therapeutics has no effect on the direction of BeyondSpring i.e., BeyondSpring and Fulcrum Therapeutics go up and down completely randomly.

Pair Corralation between BeyondSpring and Fulcrum Therapeutics

Given the investment horizon of 90 days BeyondSpring is expected to under-perform the Fulcrum Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, BeyondSpring is 1.05 times less risky than Fulcrum Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Fulcrum Therapeutics is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  399.00  in Fulcrum Therapeutics on October 7, 2024 and sell it today you would earn a total of  109.00  from holding Fulcrum Therapeutics or generate 27.32% return on investment over 90 days.

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

BeyondSpring  vs.  Fulcrum Therapeutics

BeyondSpring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeyondSpring 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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fulcrum Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeyondSpring and Fulcrum Therapeutics

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

The idea behind BeyondSpring and Fulcrum 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.