Correlation Between PhaseBio Pharmaceuticals and Nascent Biotech

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

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

Diversification Opportunities for PhaseBio Pharmaceuticals and Nascent Biotech

0.15

Correlation Coefficient

PhaseBio Pharmaceuticals  Nascent Biotech

Average diversification

The 3 months correlation between PhaseBio and Nascent is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PhaseBio Pharmaceuticals and Nascent Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nascent Biotech 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 Nascent Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nascent Biotech has no effect on the direction of PhaseBio Pharmaceuticals i.e., PhaseBio Pharmaceuticals and Nascent Biotech go up and down completely randomly.

Pair Corralation between PhaseBio Pharmaceuticals and Nascent Biotech

Assuming the 90 days horizon PhaseBio Pharmaceuticals is expected to generate 15.59 times more return on investment than Nascent Biotech. However, PhaseBio Pharmaceuticals is 15.59 times more volatile than Nascent Biotech. It trades about 0.17 of its potential returns per unit of risk. Nascent Biotech is currently generating about 0.02 per unit of risk. If you would invest  2.00  in PhaseBio Pharmaceuticals on September 13, 2024 and sell it today you would lose (1.97) from holding PhaseBio Pharmaceuticals or give up 98.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	29.09%
Values	Daily Returns

PhaseBio Pharmaceuticals  vs.  Nascent Biotech

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.

Nascent Biotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nascent Biotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Nascent Biotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PhaseBio Pharmaceuticals and Nascent Biotech

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

The idea behind PhaseBio Pharmaceuticals and Nascent Biotech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.