Correlation Between UroGen Pharma and Biocardia

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

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

Diversification Opportunities for UroGen Pharma and Biocardia

0.68

Correlation Coefficient

UroGen Pharma  Biocardia

Poor diversification

The 3 months correlation between UroGen and Biocardia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UroGen Pharma and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and UroGen Pharma 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 UroGen Pharma 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 UroGen Pharma i.e., UroGen Pharma and Biocardia go up and down completely randomly.

Pair Corralation between UroGen Pharma and Biocardia

Given the investment horizon of 90 days UroGen Pharma is expected to generate 7.22 times less return on investment than Biocardia. But when comparing it to its historical volatility, UroGen Pharma is 2.08 times less risky than Biocardia. It trades about 0.04 of its potential returns per unit of risk. Biocardia is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Biocardia on September 16, 2024 and sell it today you would earn a total of  23.00  from holding Biocardia or generate 12.43% return on investment over 90 days.

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

UroGen Pharma  vs.  Biocardia

UroGen Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UroGen Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 inconsistent 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 UroGen Pharma and Biocardia

The main advantage of trading using opposite UroGen Pharma and Biocardia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UroGen Pharma 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 UroGen Pharma 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.