Correlation Between Bio Path and Innovative Industrial

Can any of the company-specific risk be diversified away by investing in both Bio Path and Innovative Industrial 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 Innovative Industrial 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 Innovative Industrial Properties, you can compare the effects of market volatilities on Bio Path and Innovative Industrial 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 Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Path and Innovative Industrial.

Diversification Opportunities for Bio Path and Innovative Industrial

-0.55

Correlation Coefficient

Bio Path  Innovative Industrial

Excellent diversification

The 3 months correlation between Bio and Innovative is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial 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 Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Bio Path i.e., Bio Path and Innovative Industrial go up and down completely randomly.

Pair Corralation between Bio Path and Innovative Industrial

Given the investment horizon of 90 days Bio Path Holdings is expected to generate 22.51 times more return on investment than Innovative Industrial. However, Bio Path is 22.51 times more volatile than Innovative Industrial Properties. It trades about 0.07 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.1 per unit of risk. If you would invest  93.00  in Bio Path Holdings on September 24, 2024 and sell it today you would earn a total of  18.00  from holding Bio Path Holdings or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Bio Path Holdings  vs.  Innovative Industrial Properti

Bio Path Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Path Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Bio Path demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Innovative Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bio Path and Innovative Industrial

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

The idea behind Bio Path Holdings and Innovative Industrial Properties 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.