Correlation Between PhaseBio Pharmaceuticals and Biotron

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

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

Diversification Opportunities for PhaseBio Pharmaceuticals and Biotron

-0.03

Correlation Coefficient

PhaseBio Pharmaceuticals  Biotron

Good diversification

The 3 months correlation between PhaseBio and Biotron is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PhaseBio Pharmaceuticals and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and PhaseBio Pharmaceuticals 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 PhaseBio Pharmaceuticals 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 PhaseBio Pharmaceuticals i.e., PhaseBio Pharmaceuticals and Biotron go up and down completely randomly.

Pair Corralation between PhaseBio Pharmaceuticals and Biotron

If you would invest  0.03  in PhaseBio Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of  0.00  from holding PhaseBio Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

PhaseBio Pharmaceuticals  vs.  Biotron Limited

PhaseBio Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PhaseBio Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PhaseBio Pharmaceuticals 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

0 of 100

Very Weak

Over the last 90 days Biotron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PhaseBio Pharmaceuticals and Biotron

The main advantage of trading using opposite PhaseBio Pharmaceuticals and Biotron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PhaseBio Pharmaceuticals 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 PhaseBio Pharmaceuticals 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.