Correlation Between GT Biopharma and Biocardia

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

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

Diversification Opportunities for GT Biopharma and Biocardia

-0.1

Correlation Coefficient

GT Biopharma  Biocardia

Good diversification

The 3 months correlation between GTBP and Biocardia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GT Biopharma and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and GT Biopharma 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 GT Biopharma are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of GT Biopharma i.e., GT Biopharma and Biocardia go up and down completely randomly.

Pair Corralation between GT Biopharma and Biocardia

Given the investment horizon of 90 days GT Biopharma is expected to under-perform the Biocardia. In addition to that, GT Biopharma is 1.06 times more volatile than Biocardia. It trades about -0.06 of its total potential returns per unit of risk. Biocardia is currently generating about 0.11 per unit of volatility. If you would invest  215.00  in Biocardia on December 29, 2024 and sell it today you would earn a total of  65.00  from holding Biocardia or generate 30.23% return on investment over 90 days.

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

GT Biopharma  vs.  Biocardia

GT Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days GT Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Biocardia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biocardia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Biocardia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GT Biopharma and Biocardia

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

The idea behind GT Biopharma and Biocardia 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.