Correlation Between Bio Path and Fortress Biotech

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

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

Diversification Opportunities for Bio Path and Fortress Biotech

-0.29

Correlation Coefficient

Bio Path  Fortress Biotech

Very good diversification

The 3 months correlation between Bio and Fortress is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech and Bio Path 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 Bio Path Holdings are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Bio Path i.e., Bio Path and Fortress Biotech go up and down completely randomly.

Pair Corralation between Bio Path and Fortress Biotech

Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the Fortress Biotech. In addition to that, Bio Path is 1.31 times more volatile than Fortress Biotech. It trades about -0.06 of its total potential returns per unit of risk. Fortress Biotech is currently generating about 0.02 per unit of volatility. If you would invest  192.00  in Fortress Biotech on September 18, 2024 and sell it today you would lose (7.00) from holding Fortress Biotech or give up 3.65% of portfolio value over 90 days.

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

Bio Path Holdings  vs.  Fortress Biotech

Bio Path Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fortress Biotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Fortress Biotech is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bio Path and Fortress Biotech

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

The idea behind Bio Path Holdings and Fortress Biotech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.