Correlation Between Biocardia and Fresh Tracks

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

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

Diversification Opportunities for Biocardia and Fresh Tracks

-0.53

Correlation Coefficient

Biocardia  Fresh Tracks

Excellent diversification

The 3 months correlation between Biocardia and Fresh is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Fresh Tracks Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Tracks Therapeutics and Biocardia 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 Biocardia are associated (or correlated) with Fresh Tracks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Tracks Therapeutics has no effect on the direction of Biocardia i.e., Biocardia and Fresh Tracks go up and down completely randomly.

Pair Corralation between Biocardia and Fresh Tracks

Given the investment horizon of 90 days Biocardia is expected to under-perform the Fresh Tracks. In addition to that, Biocardia is 1.31 times more volatile than Fresh Tracks Therapeutics. It trades about -0.01 of its total potential returns per unit of risk. Fresh Tracks Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  146.00  in Fresh Tracks Therapeutics on September 4, 2024 and sell it today you would lose (68.00) from holding Fresh Tracks Therapeutics or give up 46.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.77%
Values	Daily Returns

Biocardia  vs.  Fresh Tracks Therapeutics

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fresh Tracks Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Tracks Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fresh Tracks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biocardia and Fresh Tracks

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

The idea behind Biocardia and Fresh Tracks 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 Stocks Directory module to find actively traded stocks across global markets.