Correlation Between PsyBio Therapeutics and Bavarian Nordic

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

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

Diversification Opportunities for PsyBio Therapeutics and Bavarian Nordic

0.32

Correlation Coefficient

PsyBio Therapeutics  Bavarian Nordic

Weak diversification

The 3 months correlation between PsyBio and Bavarian is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PsyBio Therapeutics Corp and Bavarian Nordic AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic AS and PsyBio Therapeutics 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 PsyBio Therapeutics Corp are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic AS has no effect on the direction of PsyBio Therapeutics i.e., PsyBio Therapeutics and Bavarian Nordic go up and down completely randomly.

Pair Corralation between PsyBio Therapeutics and Bavarian Nordic

Assuming the 90 days horizon PsyBio Therapeutics Corp is expected to generate 43.85 times more return on investment than Bavarian Nordic. However, PsyBio Therapeutics is 43.85 times more volatile than Bavarian Nordic AS. It trades about 0.1 of its potential returns per unit of risk. Bavarian Nordic AS is currently generating about -0.13 per unit of risk. If you would invest  0.01  in PsyBio Therapeutics Corp on October 2, 2024 and sell it today you would earn a total of  0.00  from holding PsyBio Therapeutics Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

PsyBio Therapeutics Corp  vs.  Bavarian Nordic AS

PsyBio Therapeutics Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PsyBio Therapeutics Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, PsyBio Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Bavarian Nordic AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with PsyBio Therapeutics and Bavarian Nordic

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

The idea behind PsyBio Therapeutics Corp and Bavarian Nordic AS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.