Correlation Between PetVivo Holdings and Biofrontera Warrants

Can any of the company-specific risk be diversified away by investing in both PetVivo Holdings and Biofrontera Warrants 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 PetVivo Holdings and Biofrontera Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for PetVivo Holdings and Biofrontera Warrants

-0.53

Correlation Coefficient

PetVivo Holdings  Biofrontera Warrants

Excellent diversification

The 3 months correlation between PetVivo and Biofrontera is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PetVivo Holdings Warrant and Biofrontera Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera Warrants and PetVivo Holdings 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 PetVivo Holdings Warrant are associated (or correlated) with Biofrontera Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera Warrants has no effect on the direction of PetVivo Holdings i.e., PetVivo Holdings and Biofrontera Warrants go up and down completely randomly.

Pair Corralation between PetVivo Holdings and Biofrontera Warrants

Assuming the 90 days horizon PetVivo Holdings is expected to generate 14.07 times less return on investment than Biofrontera Warrants. But when comparing it to its historical volatility, PetVivo Holdings Warrant is 7.59 times less risky than Biofrontera Warrants. It trades about 0.08 of its potential returns per unit of risk. Biofrontera Warrants is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Biofrontera Warrants on September 25, 2024 and sell it today you would lose (9.00) from holding Biofrontera Warrants or give up 45.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.06%
Values	Daily Returns

PetVivo Holdings Warrant  vs.  Biofrontera Warrants

PetVivo Holdings Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetVivo Holdings Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PetVivo Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Biofrontera Warrants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera Warrants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Biofrontera Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetVivo Holdings and Biofrontera Warrants

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

The idea behind PetVivo Holdings Warrant and Biofrontera Warrants 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.