Correlation Between Fortress Biotech and Bio Path

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

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

Diversification Opportunities for Fortress Biotech and Bio Path

0.01

Correlation Coefficient

Fortress Biotech  Bio Path

Significant diversification

The 3 months correlation between Fortress and Bio is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech 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 Fortress Biotech 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 Fortress Biotech 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 Fortress Biotech i.e., Fortress Biotech and Bio Path go up and down completely randomly.

Pair Corralation between Fortress Biotech and Bio Path

Given the investment horizon of 90 days Fortress Biotech is expected to generate 0.68 times more return on investment than Bio Path. However, Fortress Biotech is 1.48 times less risky than Bio Path. It trades about 0.09 of its potential returns per unit of risk. Bio Path Holdings is currently generating about -0.14 per unit of risk. If you would invest  174.00  in Fortress Biotech on October 22, 2024 and sell it today you would earn a total of  13.00  from holding Fortress Biotech or generate 7.47% return on investment over 90 days.

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

Fortress Biotech  vs.  Bio Path Holdings

Fortress Biotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Fortress Biotech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bio Path Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Path Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Bio Path demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and Bio Path

The main advantage of trading using opposite Fortress Biotech and Bio Path positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech 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 Fortress Biotech 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.