Correlation Between Fortress Biotech and Chicken Soup

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

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

Diversification Opportunities for Fortress Biotech and Chicken Soup

-0.42

Correlation Coefficient

Fortress Biotech  Chicken Soup

Very good diversification

The 3 months correlation between Fortress and Chicken is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and Chicken Soup For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup For and Fortress Biotech 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 Fortress Biotech Pref are associated (or correlated) with Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup For has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Chicken Soup go up and down completely randomly.

Pair Corralation between Fortress Biotech and Chicken Soup

Assuming the 90 days horizon Fortress Biotech Pref is expected to generate 0.27 times more return on investment than Chicken Soup. However, Fortress Biotech Pref is 3.74 times less risky than Chicken Soup. It trades about -0.02 of its potential returns per unit of risk. Chicken Soup For is currently generating about -0.01 per unit of risk. If you would invest  1,480  in Fortress Biotech Pref on August 31, 2024 and sell it today you would lose (889.00) from holding Fortress Biotech Pref or give up 60.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.93%
Values	Daily Returns

Fortress Biotech Pref  vs.  Chicken Soup For

Fortress Biotech Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Biotech Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Chicken Soup For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicken Soup For has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Chicken Soup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fortress Biotech and Chicken Soup

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

The idea behind Fortress Biotech Pref and Chicken Soup For 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.