Correlation Between Adaptimmune Therapeutics and Elevation Oncology
Can any of the company-specific risk be diversified away by investing in both Adaptimmune Therapeutics and Elevation Oncology 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 Adaptimmune Therapeutics and Elevation Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaptimmune Therapeutics Plc and Elevation Oncology, you can compare the effects of market volatilities on Adaptimmune Therapeutics and Elevation Oncology 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 Adaptimmune Therapeutics with a short position of Elevation Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaptimmune Therapeutics and Elevation Oncology.
Diversification Opportunities for Adaptimmune Therapeutics and Elevation Oncology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adaptimmune and Elevation is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Adaptimmune Therapeutics Plc and Elevation Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevation Oncology and Adaptimmune 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 Adaptimmune Therapeutics Plc are associated (or correlated) with Elevation Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevation Oncology has no effect on the direction of Adaptimmune Therapeutics i.e., Adaptimmune Therapeutics and Elevation Oncology go up and down completely randomly.
Pair Corralation between Adaptimmune Therapeutics and Elevation Oncology
Given the investment horizon of 90 days Adaptimmune Therapeutics Plc is expected to under-perform the Elevation Oncology. In addition to that, Adaptimmune Therapeutics is 1.25 times more volatile than Elevation Oncology. It trades about 0.0 of its total potential returns per unit of risk. Elevation Oncology is currently generating about 0.04 per unit of volatility. If you would invest 60.00 in Elevation Oncology on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Elevation Oncology or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaptimmune Therapeutics Plc vs. Elevation Oncology
Performance |
| Timeline |
| Adaptimmune Therapeutics |
| Elevation Oncology |
Adaptimmune Therapeutics and Elevation Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaptimmune Therapeutics and Elevation Oncology
The main advantage of trading using opposite Adaptimmune Therapeutics and Elevation Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaptimmune Therapeutics position performs unexpectedly, Elevation Oncology 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 Elevation Oncology will offset losses from the drop in Elevation Oncology's long position.The idea behind Adaptimmune Therapeutics Plc and Elevation Oncology 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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