Correlation Between Immutep and Biotron

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

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

Diversification Opportunities for Immutep and Biotron

-0.27

Correlation Coefficient

Immutep  Biotron

Very good diversification

The 3 months correlation between Immutep and Biotron is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Immutep Ltd ADR and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and Immutep 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 Immutep Ltd ADR are associated (or correlated) with Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Immutep i.e., Immutep and Biotron go up and down completely randomly.

Pair Corralation between Immutep and Biotron

Given the investment horizon of 90 days Immutep Ltd ADR is expected to under-perform the Biotron. But the stock apears to be less risky and, when comparing its historical volatility, Immutep Ltd ADR is 12.82 times less risky than Biotron. The stock trades about -0.02 of its potential returns per unit of risk. The Biotron Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.25  in Biotron Limited on December 1, 2024 and sell it today you would lose (0.75) from holding Biotron Limited or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Immutep Ltd ADR  vs.  Biotron Limited

Immutep Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Immutep Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Immutep is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Biotron Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Biotron Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Biotron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Immutep and Biotron

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

The idea behind Immutep Ltd ADR and Biotron Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.