Correlation Between Fortress Biotech and Cocrystal Pharma

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

By analyzing existing cross correlation between Fortress Biotech and Cocrystal Pharma, you can compare the effects of market volatilities on Fortress Biotech and Cocrystal Pharma 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 Cocrystal Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and Cocrystal Pharma.

Diversification Opportunities for Fortress Biotech and Cocrystal Pharma

0.36

Correlation Coefficient

Fortress Biotech  Cocrystal Pharma

Weak diversification

The 3 months correlation between Fortress and Cocrystal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and Cocrystal Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cocrystal Pharma 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 Cocrystal Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cocrystal Pharma has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Cocrystal Pharma go up and down completely randomly.

Pair Corralation between Fortress Biotech and Cocrystal Pharma

Given the investment horizon of 90 days Fortress Biotech is expected to under-perform the Cocrystal Pharma. In addition to that, Fortress Biotech is 1.3 times more volatile than Cocrystal Pharma. It trades about -0.03 of its total potential returns per unit of risk. Cocrystal Pharma is currently generating about 0.03 per unit of volatility. If you would invest  232.00  in Cocrystal Pharma on October 7, 2024 and sell it today you would earn a total of  3.00  from holding Cocrystal Pharma or generate 1.29% return on investment over 90 days.

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

Fortress Biotech  vs.  Cocrystal Pharma

Fortress Biotech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Fortress Biotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Cocrystal Pharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cocrystal Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Cocrystal Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and Cocrystal Pharma

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

The idea behind Fortress Biotech and Cocrystal Pharma 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.