Correlation Between ADC Therapeutics and Gaia
Can any of the company-specific risk be diversified away by investing in both ADC Therapeutics and Gaia 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 Gaia 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 Gaia Inc, you can compare the effects of market volatilities on ADC Therapeutics and Gaia 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 Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADC Therapeutics and Gaia.
Diversification Opportunities for ADC Therapeutics and Gaia
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ADC and Gaia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ADC Therapeutics SA and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia 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 Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of ADC Therapeutics i.e., ADC Therapeutics and Gaia go up and down completely randomly.
Pair Corralation between ADC Therapeutics and Gaia
Given the investment horizon of 90 days ADC Therapeutics SA is expected to under-perform the Gaia. In addition to that, ADC Therapeutics is 1.74 times more volatile than Gaia Inc. It trades about -0.24 of its total potential returns per unit of risk. Gaia Inc is currently generating about 0.25 per unit of volatility. If you would invest 526.00 in Gaia Inc on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Gaia Inc or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADC Therapeutics SA vs. Gaia Inc
Performance |
| Timeline |
| ADC Therapeutics |
| Gaia Inc |
ADC Therapeutics and Gaia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADC Therapeutics and Gaia
The main advantage of trading using opposite ADC Therapeutics and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADC Therapeutics position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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