Correlation Between X4 Pharmaceuticals and BioXcel Therapeutics

Can any of the company-specific risk be diversified away by investing in both X4 Pharmaceuticals and BioXcel Therapeutics 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 BioXcel Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X4 Pharmaceuticals and BioXcel Therapeutics, you can compare the effects of market volatilities on X4 Pharmaceuticals and BioXcel Therapeutics 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 BioXcel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of X4 Pharmaceuticals and BioXcel Therapeutics.

Diversification Opportunities for X4 Pharmaceuticals and BioXcel Therapeutics

0.29

Correlation Coefficient

X4 Pharmaceuticals  BioXcel Therapeutics

Modest diversification

The 3 months correlation between XFOR and BioXcel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding X4 Pharmaceuticals and BioXcel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioXcel Therapeutics 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 BioXcel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioXcel Therapeutics has no effect on the direction of X4 Pharmaceuticals i.e., X4 Pharmaceuticals and BioXcel Therapeutics go up and down completely randomly.

Pair Corralation between X4 Pharmaceuticals and BioXcel Therapeutics

Given the investment horizon of 90 days X4 Pharmaceuticals is expected to generate 0.89 times more return on investment than BioXcel Therapeutics. However, X4 Pharmaceuticals is 1.13 times less risky than BioXcel Therapeutics. It trades about -0.03 of its potential returns per unit of risk. BioXcel Therapeutics is currently generating about -0.09 per unit of risk. If you would invest  215.00  in X4 Pharmaceuticals on August 31, 2024 and sell it today you would lose (176.00) from holding X4 Pharmaceuticals or give up 81.86% of portfolio value over 90 days.

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

X4 Pharmaceuticals  vs.  BioXcel Therapeutics

X4 Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X4 Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BioXcel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioXcel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with X4 Pharmaceuticals and BioXcel Therapeutics

The main advantage of trading using opposite X4 Pharmaceuticals and BioXcel Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X4 Pharmaceuticals position performs unexpectedly, BioXcel Therapeutics 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 BioXcel Therapeutics will offset losses from the drop in BioXcel Therapeutics' long position.

The idea behind X4 Pharmaceuticals and BioXcel Therapeutics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.