Correlation Between Bioatla and Galmed Pharmaceuticals

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

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

Diversification Opportunities for Bioatla and Galmed Pharmaceuticals

-0.2

Correlation Coefficient

Bioatla  Galmed Pharmaceuticals

Good diversification

The 3 months correlation between Bioatla and Galmed is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bioatla and Galmed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galmed Pharmaceuticals and Bioatla 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 Bioatla are associated (or correlated) with Galmed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galmed Pharmaceuticals has no effect on the direction of Bioatla i.e., Bioatla and Galmed Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bioatla and Galmed Pharmaceuticals

Given the investment horizon of 90 days Bioatla is expected to generate 81.38 times less return on investment than Galmed Pharmaceuticals. But when comparing it to its historical volatility, Bioatla is 6.38 times less risky than Galmed Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Galmed Pharmaceuticals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  313.00  in Galmed Pharmaceuticals on September 3, 2024 and sell it today you would lose (27.00) from holding Galmed Pharmaceuticals or give up 8.63% of portfolio value over 90 days.

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

Bioatla  vs.  Galmed Pharmaceuticals

Bioatla

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioatla has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bioatla is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Galmed Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galmed Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Galmed Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bioatla and Galmed Pharmaceuticals

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

The idea behind Bioatla and Galmed Pharmaceuticals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .