Correlation Between Lexaria Bioscience and Biophytis

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

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

Diversification Opportunities for Lexaria Bioscience and Biophytis

0.87

Correlation Coefficient

Lexaria Bioscience  Biophytis

Very poor diversification

The 3 months correlation between Lexaria and Biophytis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lexaria Bioscience Corp and Biophytis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis and Lexaria Bioscience 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 Lexaria Bioscience Corp are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis has no effect on the direction of Lexaria Bioscience i.e., Lexaria Bioscience and Biophytis go up and down completely randomly.

Pair Corralation between Lexaria Bioscience and Biophytis

Given the investment horizon of 90 days Lexaria Bioscience Corp is expected to generate 0.64 times more return on investment than Biophytis. However, Lexaria Bioscience Corp is 1.55 times less risky than Biophytis. It trades about 0.03 of its potential returns per unit of risk. Biophytis is currently generating about -0.04 per unit of risk. If you would invest  246.00  in Lexaria Bioscience Corp on September 20, 2024 and sell it today you would lose (38.00) from holding Lexaria Bioscience Corp or give up 15.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	75.76%
Values	Daily Returns

Lexaria Bioscience Corp  vs.  Biophytis

Lexaria Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexaria Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Biophytis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Biophytis is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lexaria Bioscience and Biophytis

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

The idea behind Lexaria Bioscience Corp and Biophytis 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.