Correlation Between Regen BioPharma and Biocardia

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

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

Diversification Opportunities for Regen BioPharma and Biocardia

-0.31

Correlation Coefficient

Regen BioPharma  Biocardia

Very good diversification

The 3 months correlation between Regen and Biocardia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Regen BioPharma and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Regen BioPharma 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 Regen BioPharma are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Regen BioPharma i.e., Regen BioPharma and Biocardia go up and down completely randomly.

Pair Corralation between Regen BioPharma and Biocardia

Assuming the 90 days horizon Regen BioPharma is expected to generate 2.74 times more return on investment than Biocardia. However, Regen BioPharma is 2.74 times more volatile than Biocardia. It trades about 0.07 of its potential returns per unit of risk. Biocardia is currently generating about 0.11 per unit of risk. If you would invest  5.20  in Regen BioPharma on December 30, 2024 and sell it today you would lose (0.09) from holding Regen BioPharma or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Regen BioPharma  vs.  Biocardia

Regen BioPharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regen BioPharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Regen BioPharma reported solid returns over the last few months and may actually be approaching a breakup point.

Biocardia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biocardia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Biocardia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regen BioPharma and Biocardia

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

The idea behind Regen BioPharma and Biocardia 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.