Correlation Between Vaccinex and Bionomics

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

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

Diversification Opportunities for Vaccinex and Bionomics

0.79

Correlation Coefficient

Vaccinex  Bionomics

Poor diversification

The 3 months correlation between Vaccinex and Bionomics is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vaccinex and Bionomics Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionomics ADR and Vaccinex 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 Vaccinex are associated (or correlated) with Bionomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionomics ADR has no effect on the direction of Vaccinex i.e., Vaccinex and Bionomics go up and down completely randomly.

Pair Corralation between Vaccinex and Bionomics

Given the investment horizon of 90 days Vaccinex is expected to under-perform the Bionomics. But the stock apears to be less risky and, when comparing its historical volatility, Vaccinex is 2.63 times less risky than Bionomics. The stock trades about -0.02 of its potential returns per unit of risk. The Bionomics Ltd ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Bionomics Ltd ADR on September 3, 2024 and sell it today you would lose (33.00) from holding Bionomics Ltd ADR or give up 52.38% of portfolio value over 90 days.

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

Vaccinex  vs.  Bionomics Ltd ADR

Vaccinex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaccinex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bionomics ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bionomics Ltd ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bionomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaccinex and Bionomics

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

The idea behind Vaccinex and Bionomics Ltd ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.