Correlation Between ADC Therapeutics and ADTRAN
Can any of the company-specific risk be diversified away by investing in both ADC Therapeutics and ADTRAN 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 ADC Therapeutics and ADTRAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADC Therapeutics SA and ADTRAN Inc, you can compare the effects of market volatilities on ADC Therapeutics and ADTRAN 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 ADC Therapeutics with a short position of ADTRAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADC Therapeutics and ADTRAN.
Diversification Opportunities for ADC Therapeutics and ADTRAN
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ADC and ADTRAN is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ADC Therapeutics SA and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and ADC 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 ADC Therapeutics SA are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of ADC Therapeutics i.e., ADC Therapeutics and ADTRAN go up and down completely randomly.
Pair Corralation between ADC Therapeutics and ADTRAN
Given the investment horizon of 90 days ADC Therapeutics SA is expected to generate 1.96 times more return on investment than ADTRAN. However, ADC Therapeutics is 1.96 times more volatile than ADTRAN Inc. It trades about 0.03 of its potential returns per unit of risk. ADTRAN Inc is currently generating about 0.02 per unit of risk. If you would invest 212.00 in ADC Therapeutics SA on August 29, 2024 and sell it today you would earn a total of 10.00 from holding ADC Therapeutics SA or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADC Therapeutics SA vs. ADTRAN Inc
Performance |
| Timeline |
| ADC Therapeutics |
| ADTRAN Inc |
ADC Therapeutics and ADTRAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADC Therapeutics and ADTRAN
The main advantage of trading using opposite ADC Therapeutics and ADTRAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADC Therapeutics position performs unexpectedly, ADTRAN 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 ADTRAN will offset losses from the drop in ADTRAN's long position.| ADC Therapeutics vs. Passage Bio | ADC Therapeutics vs. Black Diamond Therapeutics | ADC Therapeutics vs. Alector | ADC Therapeutics vs. Century Therapeutics |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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