Correlation Between Pulmatrix and BioRestorative Therapies

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

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

Diversification Opportunities for Pulmatrix and BioRestorative Therapies

-0.65

Correlation Coefficient

Pulmatrix  BioRestorative Therapies

Excellent diversification

The 3 months correlation between Pulmatrix and BioRestorative is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pulmatrix and BioRestorative Therapies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioRestorative Therapies and Pulmatrix 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 Pulmatrix are associated (or correlated) with BioRestorative Therapies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioRestorative Therapies has no effect on the direction of Pulmatrix i.e., Pulmatrix and BioRestorative Therapies go up and down completely randomly.

Pair Corralation between Pulmatrix and BioRestorative Therapies

Given the investment horizon of 90 days Pulmatrix is expected to generate 3.01 times more return on investment than BioRestorative Therapies. However, Pulmatrix is 3.01 times more volatile than BioRestorative Therapies. It trades about 0.2 of its potential returns per unit of risk. BioRestorative Therapies is currently generating about 0.01 per unit of risk. If you would invest  179.00  in Pulmatrix on September 12, 2024 and sell it today you would earn a total of  414.00  from holding Pulmatrix or generate 231.28% return on investment over 90 days.

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

Pulmatrix  vs.  BioRestorative Therapies

Pulmatrix

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

BioRestorative Therapies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pulmatrix and BioRestorative Therapies

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

The idea behind Pulmatrix and BioRestorative Therapies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.