Correlation Between ContraFect Corp and Virax Biolabs

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

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

Diversification Opportunities for ContraFect Corp and Virax Biolabs

-0.43

Correlation Coefficient

ContraFect Corp  Virax Biolabs

Very good diversification

The 3 months correlation between ContraFect and Virax is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ContraFect Corp and Virax Biolabs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virax Biolabs Group and ContraFect Corp 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 ContraFect Corp are associated (or correlated) with Virax Biolabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virax Biolabs Group has no effect on the direction of ContraFect Corp i.e., ContraFect Corp and Virax Biolabs go up and down completely randomly.

Pair Corralation between ContraFect Corp and Virax Biolabs

Given the investment horizon of 90 days ContraFect Corp is expected to under-perform the Virax Biolabs. In addition to that, ContraFect Corp is 1.49 times more volatile than Virax Biolabs Group. It trades about -0.02 of its total potential returns per unit of risk. Virax Biolabs Group is currently generating about 0.02 per unit of volatility. If you would invest  820.00  in Virax Biolabs Group on October 27, 2024 and sell it today you would lose (613.00) from holding Virax Biolabs Group or give up 74.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	23.68%
Values	Daily Returns

ContraFect Corp  vs.  Virax Biolabs Group

ContraFect Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ContraFect Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ContraFect Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virax Biolabs Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ContraFect Corp and Virax Biolabs

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

The idea behind ContraFect Corp and Virax Biolabs Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.