Correlation Between Intracellular and Biofrontera Warrants

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

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

Diversification Opportunities for Intracellular and Biofrontera Warrants

0.33

Correlation Coefficient

Intracellular  Biofrontera Warrants

Weak diversification

The 3 months correlation between Intracellular and Biofrontera is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intracellular Th and Biofrontera Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera Warrants and Intracellular 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 Intracellular Th are associated (or correlated) with Biofrontera Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera Warrants has no effect on the direction of Intracellular i.e., Intracellular and Biofrontera Warrants go up and down completely randomly.

Pair Corralation between Intracellular and Biofrontera Warrants

Given the investment horizon of 90 days Intracellular is expected to generate 177.74 times less return on investment than Biofrontera Warrants. But when comparing it to its historical volatility, Intracellular Th is 192.9 times less risky than Biofrontera Warrants. It trades about 0.32 of its potential returns per unit of risk. Biofrontera Warrants is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  5.65  in Biofrontera Warrants on November 29, 2024 and sell it today you would earn a total of  4.35  from holding Biofrontera Warrants or generate 76.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

Intracellular Th  vs.  Biofrontera Warrants

Intracellular Th

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Biofrontera Warrants

Risk-Adjusted Performance

Insignificant

Over the last 90 days Biofrontera Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent forward indicators, Biofrontera Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intracellular and Biofrontera Warrants

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

The idea behind Intracellular Th and Biofrontera Warrants 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.