Correlation Between Soleno Therapeutics and Bio Path

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

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

Diversification Opportunities for Soleno Therapeutics and Bio Path

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Correlation Coefficient

Soleno Therapeutics  Bio Path

Pay attention - limited upside

The 3 months correlation between Soleno and Bio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and Bio Path Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Path Holdings and Soleno 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 Soleno Therapeutics are associated (or correlated) with Bio Path. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Path Holdings has no effect on the direction of Soleno Therapeutics i.e., Soleno Therapeutics and Bio Path go up and down completely randomly.

Pair Corralation between Soleno Therapeutics and Bio Path

Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 0.45 times more return on investment than Bio Path. However, Soleno Therapeutics is 2.22 times less risky than Bio Path. It trades about 0.02 of its potential returns per unit of risk. Bio Path Holdings is currently generating about -0.03 per unit of risk. If you would invest  4,980  in Soleno Therapeutics on September 4, 2024 and sell it today you would earn a total of  20.00  from holding Soleno Therapeutics or generate 0.4% return on investment over 90 days.

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

Soleno Therapeutics  vs.  Bio Path Holdings

Soleno Therapeutics

Risk-Adjusted Performance

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Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soleno Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Soleno Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Bio Path Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Soleno Therapeutics and Bio Path

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

The idea behind Soleno Therapeutics and Bio Path Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.