Correlation Between Biofrontera and Scynexis

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

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

Diversification Opportunities for Biofrontera and Scynexis

0.35

Correlation Coefficient

Biofrontera  Scynexis

Weak diversification

The 3 months correlation between Biofrontera and Scynexis is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Biofrontera and Scynexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scynexis and Biofrontera 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 Biofrontera are associated (or correlated) with Scynexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scynexis has no effect on the direction of Biofrontera i.e., Biofrontera and Scynexis go up and down completely randomly.

Pair Corralation between Biofrontera and Scynexis

Given the investment horizon of 90 days Biofrontera is expected to generate 2.6 times more return on investment than Scynexis. However, Biofrontera is 2.6 times more volatile than Scynexis. It trades about 0.04 of its potential returns per unit of risk. Scynexis is currently generating about -0.04 per unit of risk. If you would invest  123.00  in Biofrontera on September 12, 2024 and sell it today you would lose (4.00) from holding Biofrontera or give up 3.25% of portfolio value over 90 days.

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

Biofrontera  vs.  Scynexis

Biofrontera

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Biofrontera demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Scynexis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scynexis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Biofrontera and Scynexis

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

The idea behind Biofrontera and Scynexis 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.