Correlation Between Vericel Corp and Bio Path

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

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

Diversification Opportunities for Vericel Corp and Bio Path

-0.72

Correlation Coefficient

Vericel Corp  Bio Path

Pay attention - limited upside

The 3 months correlation between Vericel and Bio is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Bio Path Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Path Holdings and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Bio Path. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Path Holdings has no effect on the direction of Vericel Corp i.e., Vericel Corp and Bio Path go up and down completely randomly.

Pair Corralation between Vericel Corp and Bio Path

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 0.44 times more return on investment than Bio Path. However, Vericel Corp Ord is 2.3 times less risky than Bio Path. It trades about 0.12 of its potential returns per unit of risk. Bio Path Holdings is currently generating about -0.03 per unit of risk. If you would invest  4,797  in Vericel Corp Ord on September 4, 2024 and sell it today you would earn a total of  1,077  from holding Vericel Corp Ord or generate 22.45% return on investment over 90 days.

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

Vericel Corp Ord  vs.  Bio Path Holdings

Vericel Corp Ord

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bio Path Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Vericel Corp and Bio Path

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

The idea behind Vericel Corp Ord and Bio Path Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.