Correlation Between Bright Minds and PepGen

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

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

Diversification Opportunities for Bright Minds and PepGen

0.09

Correlation Coefficient

Bright Minds  PepGen

Significant diversification

The 3 months correlation between Bright and PepGen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bright Minds Biosciences and PepGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepGen and Bright Minds 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 Bright Minds Biosciences are associated (or correlated) with PepGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepGen has no effect on the direction of Bright Minds i.e., Bright Minds and PepGen go up and down completely randomly.

Pair Corralation between Bright Minds and PepGen

Given the investment horizon of 90 days Bright Minds Biosciences is expected to generate 0.34 times more return on investment than PepGen. However, Bright Minds Biosciences is 2.95 times less risky than PepGen. It trades about 0.02 of its potential returns per unit of risk. PepGen is currently generating about -0.04 per unit of risk. If you would invest  3,686  in Bright Minds Biosciences on December 29, 2024 and sell it today you would lose (69.00) from holding Bright Minds Biosciences or give up 1.87% of portfolio value over 90 days.

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

Bright Minds Biosciences  vs.  PepGen

Bright Minds Biosciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bright Minds is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PepGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepGen 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bright Minds and PepGen

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

The idea behind Bright Minds Biosciences and PepGen 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.