Correlation Between BriaCell Therapeutics and Denali Therapeutics

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

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

Diversification Opportunities for BriaCell Therapeutics and Denali Therapeutics

-0.33

Correlation Coefficient

BriaCell Therapeutics  Denali Therapeutics

Very good diversification

The 3 months correlation between BriaCell and Denali is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BriaCell Therapeutics Corp and Denali Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Therapeutics and BriaCell Therapeutics 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 BriaCell Therapeutics Corp are associated (or correlated) with Denali Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Therapeutics has no effect on the direction of BriaCell Therapeutics i.e., BriaCell Therapeutics and Denali Therapeutics go up and down completely randomly.

Pair Corralation between BriaCell Therapeutics and Denali Therapeutics

Assuming the 90 days horizon BriaCell Therapeutics Corp is expected to generate 3.3 times more return on investment than Denali Therapeutics. However, BriaCell Therapeutics is 3.3 times more volatile than Denali Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Denali Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  21.00  in BriaCell Therapeutics Corp on September 2, 2024 and sell it today you would earn a total of  22.00  from holding BriaCell Therapeutics Corp or generate 104.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BriaCell Therapeutics Corp  vs.  Denali Therapeutics

BriaCell Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BriaCell Therapeutics Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BriaCell Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Denali Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Denali Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BriaCell Therapeutics and Denali Therapeutics

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

The idea behind BriaCell Therapeutics Corp and Denali 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.