Correlation Between Ibio and Bio Path

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

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

Diversification Opportunities for Ibio and Bio Path

0.17

Correlation Coefficient

Ibio  Bio Path

Average diversification

The 3 months correlation between Ibio and Bio is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ibio Inc 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 Ibio 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 Ibio Inc 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 Ibio i.e., Ibio and Bio Path go up and down completely randomly.

Pair Corralation between Ibio and Bio Path

Given the investment horizon of 90 days Ibio Inc is expected to generate 1.19 times more return on investment than Bio Path. However, Ibio is 1.19 times more volatile than Bio Path Holdings. It trades about 0.01 of its potential returns per unit of risk. Bio Path Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,462  in Ibio Inc on October 7, 2024 and sell it today you would lose (1,217) from holding Ibio Inc or give up 83.24% of portfolio value over 90 days.

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

Ibio Inc  vs.  Bio Path Holdings

Ibio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Ibio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Bio Path Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Path Holdings are ranked lower than 6 (%) 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 Ibio and Bio Path

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

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.