Correlation Between Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals

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

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

Diversification Opportunities for Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals

0.25

Correlation Coefficient

Cyclacel Pharmaceuticals  BioCryst Pharmaceuticals

Modest diversification

The 3 months correlation between Cyclacel and BioCryst is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioCryst Pharmaceuticals and Cyclacel Pharmaceuticals 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 Cyclacel Pharmaceuticals are associated (or correlated) with BioCryst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioCryst Pharmaceuticals has no effect on the direction of Cyclacel Pharmaceuticals i.e., Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals

Given the investment horizon of 90 days Cyclacel Pharmaceuticals is expected to under-perform the BioCryst Pharmaceuticals. In addition to that, Cyclacel Pharmaceuticals is 2.5 times more volatile than BioCryst Pharmaceuticals. It trades about -0.16 of its total potential returns per unit of risk. BioCryst Pharmaceuticals is currently generating about -0.01 per unit of volatility. If you would invest  792.00  in BioCryst Pharmaceuticals on September 17, 2024 and sell it today you would lose (46.00) from holding BioCryst Pharmaceuticals or give up 5.81% of portfolio value over 90 days.

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

Cyclacel Pharmaceuticals  vs.  BioCryst Pharmaceuticals

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BioCryst Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cyclacel Pharmaceuticals and BioCryst Pharmaceuticals

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

The idea behind Cyclacel Pharmaceuticals and BioCryst 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.