Correlation Between Zura Bio and Bellerophon Therapeutics

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

By analyzing existing cross correlation between Zura Bio Limited and Bellerophon Therapeutics, you can compare the effects of market volatilities on Zura Bio and Bellerophon 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 Zura Bio with a short position of Bellerophon Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zura Bio and Bellerophon Therapeutics.

Diversification Opportunities for Zura Bio and Bellerophon Therapeutics

0.27

Correlation Coefficient

Zura Bio  Bellerophon Therapeutics

Modest diversification

The 3 months correlation between Zura and Bellerophon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zura Bio Limited and Bellerophon Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellerophon Therapeutics and Zura Bio 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 Zura Bio Limited are associated (or correlated) with Bellerophon Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellerophon Therapeutics has no effect on the direction of Zura Bio i.e., Zura Bio and Bellerophon Therapeutics go up and down completely randomly.

Pair Corralation between Zura Bio and Bellerophon Therapeutics

If you would invest  71.00  in Bellerophon Therapeutics on September 11, 2024 and sell it today you would earn a total of  0.00  from holding Bellerophon Therapeutics or generate 0.0% return on investment over 90 days.

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

Zura Bio Limited  vs.  Bellerophon Therapeutics

Zura Bio Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bellerophon Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellerophon Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bellerophon Therapeutics is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Zura Bio and Bellerophon Therapeutics

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

The idea behind Zura Bio Limited and Bellerophon 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.