Correlation Between Bicycle Therapeutics and AnaptysBio
Can any of the company-specific risk be diversified away by investing in both Bicycle Therapeutics and AnaptysBio 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 Bicycle Therapeutics and AnaptysBio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bicycle Therapeutics and AnaptysBio, you can compare the effects of market volatilities on Bicycle Therapeutics and AnaptysBio 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 Bicycle Therapeutics with a short position of AnaptysBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bicycle Therapeutics and AnaptysBio.
Diversification Opportunities for Bicycle Therapeutics and AnaptysBio
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bicycle and AnaptysBio is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and AnaptysBio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AnaptysBio and Bicycle 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 Bicycle Therapeutics are associated (or correlated) with AnaptysBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AnaptysBio has no effect on the direction of Bicycle Therapeutics i.e., Bicycle Therapeutics and AnaptysBio go up and down completely randomly.
Pair Corralation between Bicycle Therapeutics and AnaptysBio
Given the investment horizon of 90 days Bicycle Therapeutics is expected to under-perform the AnaptysBio. But the stock apears to be less risky and, when comparing its historical volatility, Bicycle Therapeutics is 1.91 times less risky than AnaptysBio. The stock trades about -0.29 of its potential returns per unit of risk. The AnaptysBio is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,218 in AnaptysBio on August 31, 2024 and sell it today you would earn a total of 294.00 from holding AnaptysBio or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bicycle Therapeutics vs. AnaptysBio
Performance |
| Timeline |
| Bicycle Therapeutics |
| AnaptysBio |
Bicycle Therapeutics and AnaptysBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bicycle Therapeutics and AnaptysBio
The main advantage of trading using opposite Bicycle Therapeutics and AnaptysBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bicycle Therapeutics position performs unexpectedly, AnaptysBio 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 AnaptysBio will offset losses from the drop in AnaptysBio's long position.| Bicycle Therapeutics vs. Ideaya Biosciences | Bicycle Therapeutics vs. AnaptysBio | Bicycle Therapeutics vs. MeiraGTx Holdings PLC | Bicycle Therapeutics vs. Keros Therapeutics |
| AnaptysBio vs. Crinetics Pharmaceuticals | AnaptysBio vs. Rhythm Pharmaceuticals | AnaptysBio vs. Kura Oncology | AnaptysBio vs. CytomX 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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