Correlation Between Regen BioPharma and GT Biopharma

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

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

Diversification Opportunities for Regen BioPharma and GT Biopharma

0.26

Correlation Coefficient

Regen BioPharma  GT Biopharma

Modest diversification

The 3 months correlation between Regen and GTBP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Regen BioPharma and GT Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Biopharma 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 GT Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Biopharma has no effect on the direction of Regen BioPharma i.e., Regen BioPharma and GT Biopharma go up and down completely randomly.

Pair Corralation between Regen BioPharma and GT Biopharma

Assuming the 90 days horizon Regen BioPharma is expected to generate 2.4 times more return on investment than GT Biopharma. However, Regen BioPharma is 2.4 times more volatile than GT Biopharma. It trades about 0.09 of its potential returns per unit of risk. GT Biopharma is currently generating about 0.02 per unit of risk. If you would invest  10.00  in Regen BioPharma on November 28, 2024 and sell it today you would lose (3.99) from holding Regen BioPharma or give up 39.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Regen BioPharma  vs.  GT Biopharma

Regen BioPharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regen BioPharma are ranked lower than 7 (%) 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.

GT Biopharma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GT Biopharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, GT Biopharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regen BioPharma and GT Biopharma

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

The idea behind Regen BioPharma and GT Biopharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.