Correlation Between Fortress Biotech and LadRx

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

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

Diversification Opportunities for Fortress Biotech and LadRx

-0.59

Correlation Coefficient

Fortress Biotech  LadRx

Excellent diversification

The 3 months correlation between Fortress and LadRx is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and LadRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LadRx 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 Pref are associated (or correlated) with LadRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LadRx has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and LadRx go up and down completely randomly.

Pair Corralation between Fortress Biotech and LadRx

Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the LadRx. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fortress Biotech Pref is 3.08 times less risky than LadRx. The preferred stock trades about 0.0 of its potential returns per unit of risk. The LadRx is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,100  in LadRx on September 22, 2024 and sell it today you would lose (863.00) from holding LadRx or give up 78.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.17%
Values	Daily Returns

Fortress Biotech Pref  vs.  LadRx

Fortress Biotech Pref

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

LadRx

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fortress Biotech and LadRx

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

The idea behind Fortress Biotech Pref and LadRx 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.