Correlation Between Soleno Therapeutics and BioRestorative Therapies

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

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

Diversification Opportunities for Soleno Therapeutics and BioRestorative Therapies

0.29

Correlation Coefficient

Soleno Therapeutics  BioRestorative Therapies

Modest diversification

The 3 months correlation between Soleno and BioRestorative is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and BioRestorative Therapies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioRestorative Therapies and Soleno 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 Soleno Therapeutics are associated (or correlated) with BioRestorative Therapies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioRestorative Therapies has no effect on the direction of Soleno Therapeutics i.e., Soleno Therapeutics and BioRestorative Therapies go up and down completely randomly.

Pair Corralation between Soleno Therapeutics and BioRestorative Therapies

Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 0.9 times more return on investment than BioRestorative Therapies. However, Soleno Therapeutics is 1.11 times less risky than BioRestorative Therapies. It trades about 0.16 of its potential returns per unit of risk. BioRestorative Therapies is currently generating about 0.09 per unit of risk. If you would invest  4,495  in Soleno Therapeutics on December 31, 2024 and sell it today you would earn a total of  2,704  from holding Soleno Therapeutics or generate 60.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Soleno Therapeutics  vs.  BioRestorative Therapies

Soleno Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soleno Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Soleno Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

BioRestorative Therapies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioRestorative Therapies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, BioRestorative Therapies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soleno Therapeutics and BioRestorative Therapies

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

The idea behind Soleno Therapeutics and BioRestorative Therapies 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.