Correlation Between BioXcel Therapeutics and Caribou Biosciences

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

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

Diversification Opportunities for BioXcel Therapeutics and Caribou Biosciences

0.4

Correlation Coefficient

BioXcel Therapeutics  Caribou Biosciences

Very weak diversification

The 3 months correlation between BioXcel and Caribou is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BioXcel Therapeutics and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and BioXcel 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 BioXcel Therapeutics are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of BioXcel Therapeutics i.e., BioXcel Therapeutics and Caribou Biosciences go up and down completely randomly.

Pair Corralation between BioXcel Therapeutics and Caribou Biosciences

Given the investment horizon of 90 days BioXcel Therapeutics is expected to under-perform the Caribou Biosciences. In addition to that, BioXcel Therapeutics is 1.27 times more volatile than Caribou Biosciences. It trades about -0.05 of its total potential returns per unit of risk. Caribou Biosciences is currently generating about 0.1 per unit of volatility. If you would invest  190.00  in Caribou Biosciences on September 4, 2024 and sell it today you would earn a total of  47.00  from holding Caribou Biosciences or generate 24.74% return on investment over 90 days.

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

BioXcel Therapeutics  vs.  Caribou Biosciences

BioXcel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioXcel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Caribou Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caribou Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Caribou Biosciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioXcel Therapeutics and Caribou Biosciences

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

The idea behind BioXcel Therapeutics and Caribou Biosciences 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.