Correlation Between Reata Pharmaceuticals and BioXcel Therapeutics

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

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

Diversification Opportunities for Reata Pharmaceuticals and BioXcel Therapeutics

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Correlation Coefficient

Reata Pharmaceuticals  BioXcel Therapeutics

Pay attention - limited upside

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

Pair Corralation between Reata Pharmaceuticals and BioXcel Therapeutics

If you would invest (100.00) in Reata Pharmaceuticals on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Reata Pharmaceuticals 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

Reata Pharmaceuticals  vs.  BioXcel Therapeutics

Reata Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reata Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Reata Pharmaceuticals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BioXcel Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioXcel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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 Reata Pharmaceuticals and BioXcel Therapeutics

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

The idea behind Reata Pharmaceuticals and BioXcel Therapeutics 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 Anywhere module to track or share privately all of your investments from the convenience of any device.