Correlation Between Park Ohio and Biocardia

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

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

Diversification Opportunities for Park Ohio and Biocardia

-0.06

Correlation Coefficient

Park Ohio  Biocardia

Good diversification

The 3 months correlation between Park and Biocardia is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Park Ohio i.e., Park Ohio and Biocardia go up and down completely randomly.

Pair Corralation between Park Ohio and Biocardia

Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the Biocardia. But the stock apears to be less risky and, when comparing its historical volatility, Park Ohio Holdings is 3.01 times less risky than Biocardia. The stock trades about -0.57 of its potential returns per unit of risk. The Biocardia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Biocardia on September 30, 2024 and sell it today you would earn a total of  18.00  from holding Biocardia or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Park Ohio Holdings  vs.  Biocardia

Park Ohio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Ohio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Park Ohio and Biocardia

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

The idea behind Park Ohio Holdings and Biocardia 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.