Correlation Between Mallinckrodt Plc and Biofrontera

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

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

Diversification Opportunities for Mallinckrodt Plc and Biofrontera

0.0

Correlation Coefficient

Mallinckrodt Plc  Biofrontera

Pay attention - limited upside

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

Pair Corralation between Mallinckrodt Plc and Biofrontera

If you would invest (100.00) in Mallinckrodt Plc on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Mallinckrodt Plc or generate -100.0% return on investment over 90 days.

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

Mallinckrodt Plc  vs.  Biofrontera

Mallinckrodt Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Biofrontera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biofrontera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mallinckrodt Plc and Biofrontera

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

The idea behind Mallinckrodt Plc and Biofrontera 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.