Correlation Between Sonnet Biotherapeutics and BioLineRx

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

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

Diversification Opportunities for Sonnet Biotherapeutics and BioLineRx

0.81

Correlation Coefficient

Sonnet Biotherapeutics  BioLineRx

Very poor diversification

The 3 months correlation between Sonnet and BioLineRx is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sonnet Biotherapeutics Holding and BioLineRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLineRx and Sonnet Biotherapeutics 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 Sonnet Biotherapeutics Holdings are associated (or correlated) with BioLineRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLineRx has no effect on the direction of Sonnet Biotherapeutics i.e., Sonnet Biotherapeutics and BioLineRx go up and down completely randomly.

Pair Corralation between Sonnet Biotherapeutics and BioLineRx

Given the investment horizon of 90 days Sonnet Biotherapeutics Holdings is expected to under-perform the BioLineRx. But the stock apears to be less risky and, when comparing its historical volatility, Sonnet Biotherapeutics Holdings is 1.35 times less risky than BioLineRx. The stock trades about -0.21 of its potential returns per unit of risk. The BioLineRx is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  47.00  in BioLineRx on October 8, 2024 and sell it today you would lose (31.00) from holding BioLineRx or give up 65.96% of portfolio value over 90 days.

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

Sonnet Biotherapeutics Holding  vs.  BioLineRx

Sonnet Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonnet Biotherapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BioLineRx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLineRx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sonnet Biotherapeutics and BioLineRx

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

The idea behind Sonnet Biotherapeutics Holdings and BioLineRx 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.