Correlation Between Bio Path and Seelos Therapeutics

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

Diversification Opportunities for Bio Path and Seelos Therapeutics

0.55

Correlation Coefficient

Bio Path  Seelos Therapeutics

Very weak diversification

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

Pair Corralation between Bio Path and Seelos Therapeutics

Given the investment horizon of 90 days Bio Path Holdings is expected to generate 0.46 times more return on investment than Seelos Therapeutics. However, Bio Path Holdings is 2.18 times less risky than Seelos Therapeutics. It trades about -0.07 of its potential returns per unit of risk. Seelos Therapeutics is currently generating about -0.24 per unit of risk. If you would invest  105.00  in Bio Path Holdings on September 17, 2024 and sell it today you would lose (38.00) from holding Bio Path Holdings or give up 36.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.77%
Values	Daily Returns

Bio Path Holdings  vs.  Seelos Therapeutics

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.

Seelos Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seelos Therapeutics 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bio Path and Seelos Therapeutics

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

The idea behind Bio Path Holdings and Seelos 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.