Correlation Between Adaptimmune Therapeutics and Mesoblast
Can any of the company-specific risk be diversified away by investing in both Adaptimmune Therapeutics and Mesoblast 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 Mesoblast 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 Mesoblast, you can compare the effects of market volatilities on Adaptimmune Therapeutics and Mesoblast 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 Mesoblast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaptimmune Therapeutics and Mesoblast.
Diversification Opportunities for Adaptimmune Therapeutics and Mesoblast
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adaptimmune and Mesoblast is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Adaptimmune Therapeutics Plc and Mesoblast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesoblast 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 Mesoblast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesoblast has no effect on the direction of Adaptimmune Therapeutics i.e., Adaptimmune Therapeutics and Mesoblast go up and down completely randomly.
Pair Corralation between Adaptimmune Therapeutics and Mesoblast
Given the investment horizon of 90 days Adaptimmune Therapeutics is expected to generate 13.14 times less return on investment than Mesoblast. But when comparing it to its historical volatility, Adaptimmune Therapeutics Plc is 1.46 times less risky than Mesoblast. It trades about 0.02 of its potential returns per unit of risk. Mesoblast is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 183.00 in Mesoblast on November 9, 2024 and sell it today you would earn a total of 1,686 from holding Mesoblast or generate 921.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.25% |
| Values | Daily Returns |
Adaptimmune Therapeutics Plc vs. Mesoblast
Performance |
| Timeline |
| Adaptimmune Therapeutics |
| Mesoblast |
Adaptimmune Therapeutics and Mesoblast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaptimmune Therapeutics and Mesoblast
The main advantage of trading using opposite Adaptimmune Therapeutics and Mesoblast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaptimmune Therapeutics position performs unexpectedly, Mesoblast 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 Mesoblast will offset losses from the drop in Mesoblast's long position.The idea behind Adaptimmune Therapeutics Plc and Mesoblast 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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