Correlation Between Histogen and Better Therapeutics

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

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

Diversification Opportunities for Histogen and Better Therapeutics

0.0

Correlation Coefficient

Histogen  Better Therapeutics

Pay attention - limited upside

The 3 months correlation between Histogen and Better is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Histogen and Better Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Therapeutics and Histogen 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 Histogen are associated (or correlated) with Better Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Therapeutics has no effect on the direction of Histogen i.e., Histogen and Better Therapeutics go up and down completely randomly.

Pair Corralation between Histogen and Better Therapeutics

If you would invest  2.00  in Histogen on November 28, 2024 and sell it today you would earn a total of  0.70  from holding Histogen or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Histogen  vs.  Better Therapeutics

Histogen

Risk-Adjusted Performance

OK

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Histogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Better Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Histogen and Better Therapeutics

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

The idea behind Histogen and Better Therapeutics 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.