Correlation Between VBI Vaccines and ADMA Biologics

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

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

Diversification Opportunities for VBI Vaccines and ADMA Biologics

0.27

Correlation Coefficient

VBI Vaccines  ADMA Biologics

Modest diversification

The 3 months correlation between VBI and ADMA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding VBI Vaccines and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and VBI Vaccines 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 VBI Vaccines are associated (or correlated) with ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of VBI Vaccines i.e., VBI Vaccines and ADMA Biologics go up and down completely randomly.

Pair Corralation between VBI Vaccines and ADMA Biologics

If you would invest (100.00) in VBI Vaccines on September 24, 2024 and sell it today you would earn a total of  100.00  from holding VBI Vaccines or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

VBI Vaccines  vs.  ADMA Biologics

VBI Vaccines

Risk-Adjusted Performance

0 of 100

Very Weak

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

ADMA Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADMA Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, ADMA Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VBI Vaccines and ADMA Biologics

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

The idea behind VBI Vaccines and ADMA Biologics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.