Correlation Between Equillium and Bio Path

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

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

Diversification Opportunities for Equillium and Bio Path

0.65

Correlation Coefficient

Equillium  Bio Path

Poor diversification

The 3 months correlation between Equillium and Bio is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Bio Path Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Path Holdings and Equillium 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 Equillium are associated (or correlated) with Bio Path. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Path Holdings has no effect on the direction of Equillium i.e., Equillium and Bio Path go up and down completely randomly.

Pair Corralation between Equillium and Bio Path

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Bio Path. In addition to that, Equillium is 1.16 times more volatile than Bio Path Holdings. It trades about -0.02 of its total potential returns per unit of risk. Bio Path Holdings is currently generating about -0.03 per unit of volatility. If you would invest  93.00  in Bio Path Holdings on September 4, 2024 and sell it today you would lose (19.00) from holding Bio Path Holdings or give up 20.43% of portfolio value over 90 days.

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

Equillium  vs.  Bio Path Holdings

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Bio Path Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Equillium and Bio Path

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

The idea behind Equillium and Bio Path Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.