Correlation Between Bio Path and Assembly Biosciences

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

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

Diversification Opportunities for Bio Path and Assembly Biosciences

0.43

Correlation Coefficient

Bio Path  Assembly Biosciences

Very weak diversification

The 3 months correlation between Bio and Assembly is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences and Bio Path 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 Bio Path Holdings are associated (or correlated) with Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of Bio Path i.e., Bio Path and Assembly Biosciences go up and down completely randomly.

Pair Corralation between Bio Path and Assembly Biosciences

Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the Assembly Biosciences. In addition to that, Bio Path is 1.57 times more volatile than Assembly Biosciences. It trades about -0.03 of its total potential returns per unit of risk. Assembly Biosciences is currently generating about 0.05 per unit of volatility. If you would invest  1,583  in Assembly Biosciences on August 31, 2024 and sell it today you would earn a total of  121.00  from holding Assembly Biosciences or generate 7.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Bio Path Holdings  vs.  Assembly Biosciences

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Assembly Biosciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Assembly Biosciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Assembly Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bio Path and Assembly Biosciences

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

The idea behind Bio Path Holdings and Assembly Biosciences 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.