Correlation Between Timber Pharmaceuticals and Benitec Biopharma

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

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

Diversification Opportunities for Timber Pharmaceuticals and Benitec Biopharma

0.66

Correlation Coefficient

Timber Pharmaceuticals  Benitec Biopharma

Poor diversification

The 3 months correlation between Timber and Benitec is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Timber Pharmaceuticals and Benitec Biopharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benitec Biopharma and Timber 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 Timber Pharmaceuticals are associated (or correlated) with Benitec Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benitec Biopharma has no effect on the direction of Timber Pharmaceuticals i.e., Timber Pharmaceuticals and Benitec Biopharma go up and down completely randomly.

Pair Corralation between Timber Pharmaceuticals and Benitec Biopharma

If you would invest  898.00  in Benitec Biopharma Ltd on September 3, 2024 and sell it today you would earn a total of  111.00  from holding Benitec Biopharma Ltd or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Timber Pharmaceuticals  vs.  Benitec Biopharma Ltd

Timber Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timber Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Timber Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Benitec Biopharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Timber Pharmaceuticals and Benitec Biopharma

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

The idea behind Timber Pharmaceuticals and Benitec Biopharma Ltd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.