Correlation Between X4 Pharmaceuticals and Biohaven Pharmaceutical

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Can any of the company-specific risk be diversified away by investing in both X4 Pharmaceuticals and Biohaven Pharmaceutical 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 X4 Pharmaceuticals and Biohaven Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X4 Pharmaceuticals and Biohaven Pharmaceutical Holding, you can compare the effects of market volatilities on X4 Pharmaceuticals and Biohaven Pharmaceutical 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 X4 Pharmaceuticals with a short position of Biohaven Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of X4 Pharmaceuticals and Biohaven Pharmaceutical.

Diversification Opportunities for X4 Pharmaceuticals and Biohaven Pharmaceutical

XFORBiohavenDiversified AwayXFORBiohavenDiversified Away100%
-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between XFOR and Biohaven is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding X4 Pharmaceuticals and Biohaven Pharmaceutical Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biohaven Pharmaceutical and X4 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 X4 Pharmaceuticals are associated (or correlated) with Biohaven Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biohaven Pharmaceutical has no effect on the direction of X4 Pharmaceuticals i.e., X4 Pharmaceuticals and Biohaven Pharmaceutical go up and down completely randomly.

Pair Corralation between X4 Pharmaceuticals and Biohaven Pharmaceutical

Given the investment horizon of 90 days X4 Pharmaceuticals is expected to generate 4.15 times more return on investment than Biohaven Pharmaceutical. However, X4 Pharmaceuticals is 4.15 times more volatile than Biohaven Pharmaceutical Holding. It trades about 0.06 of its potential returns per unit of risk. Biohaven Pharmaceutical Holding is currently generating about 0.09 per unit of risk. If you would invest  49.00  in X4 Pharmaceuticals on November 20, 2024 and sell it today you would earn a total of  0.85  from holding X4 Pharmaceuticals or generate 1.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

X4 Pharmaceuticals  vs.  Biohaven Pharmaceutical Holdin

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-20020
JavaScript chart by amCharts 3.21.15XFOR BHVN
       Timeline  
X4 Pharmaceuticals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.50.60.70.8
Biohaven Pharmaceutical 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Biohaven Pharmaceutical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3436384042444648

X4 Pharmaceuticals and Biohaven Pharmaceutical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-46.86-35.1-23.33-11.570.011.8823.9736.0548.13 0.0050.0100.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15XFOR BHVN
       Returns  

Pair Trading with X4 Pharmaceuticals and Biohaven Pharmaceutical

The main advantage of trading using opposite X4 Pharmaceuticals and Biohaven Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X4 Pharmaceuticals position performs unexpectedly, Biohaven Pharmaceutical 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 Biohaven Pharmaceutical will offset losses from the drop in Biohaven Pharmaceutical's long position.
The idea behind X4 Pharmaceuticals and Biohaven Pharmaceutical Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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