Correlation Between Cell Source and Biodexa Pharmaceticals

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

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

Diversification Opportunities for Cell Source and Biodexa Pharmaceticals

-0.14

Correlation Coefficient

Cell Source  Biodexa Pharmaceticals

Good diversification

The 3 months correlation between Cell and Biodexa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cell Source and Biodexa Pharmaceticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodexa Pharmaceticals and Cell Source 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 Cell Source are associated (or correlated) with Biodexa Pharmaceticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodexa Pharmaceticals has no effect on the direction of Cell Source i.e., Cell Source and Biodexa Pharmaceticals go up and down completely randomly.

Pair Corralation between Cell Source and Biodexa Pharmaceticals

Given the investment horizon of 90 days Cell Source is expected to generate 1.5 times more return on investment than Biodexa Pharmaceticals. However, Cell Source is 1.5 times more volatile than Biodexa Pharmaceticals. It trades about 0.11 of its potential returns per unit of risk. Biodexa Pharmaceticals is currently generating about 0.01 per unit of risk. If you would invest  30.00  in Cell Source on October 7, 2024 and sell it today you would earn a total of  11.00  from holding Cell Source or generate 36.67% return on investment over 90 days.

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

Cell Source  vs.  Biodexa Pharmaceticals

Cell Source

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cell Source are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Cell Source unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biodexa Pharmaceticals

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biodexa Pharmaceticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Biodexa Pharmaceticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cell Source and Biodexa Pharmaceticals

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

The idea behind Cell Source and Biodexa Pharmaceticals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.