Correlation Between Bicycle Therapeutics and Crinetics Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Bicycle Therapeutics and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bicycle Therapeutics and Crinetics Pharmaceuticals, you can compare the effects of market volatilities on Bicycle Therapeutics and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bicycle Therapeutics and Crinetics Pharmaceuticals.
Diversification Opportunities for Bicycle Therapeutics and Crinetics Pharmaceuticals
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bicycle and Crinetics is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Bicycle Therapeutics i.e., Bicycle Therapeutics and Crinetics Pharmaceuticals go up and down completely randomly.
Pair Corralation between Bicycle Therapeutics and Crinetics Pharmaceuticals
Given the investment horizon of 90 days Bicycle Therapeutics is expected to under-perform the Crinetics Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Bicycle Therapeutics is 1.15 times less risky than Crinetics Pharmaceuticals. The stock trades about -0.01 of its potential returns per unit of risk. The Crinetics Pharmaceuticals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,814 in Crinetics Pharmaceuticals on August 27, 2024 and sell it today you would earn a total of 3,792 from holding Crinetics Pharmaceuticals or generate 209.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bicycle Therapeutics vs. Crinetics Pharmaceuticals
Performance |
| Timeline |
| Bicycle Therapeutics |
| Crinetics Pharmaceuticals |
Bicycle Therapeutics and Crinetics Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bicycle Therapeutics and Crinetics Pharmaceuticals
The main advantage of trading using opposite Bicycle Therapeutics and Crinetics Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bicycle Therapeutics position performs unexpectedly, Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals will offset losses from the drop in Crinetics Pharmaceuticals' long position.| Bicycle Therapeutics vs. Ideaya Biosciences | Bicycle Therapeutics vs. AnaptysBio | Bicycle Therapeutics vs. MeiraGTx Holdings PLC | Bicycle Therapeutics vs. Keros Therapeutics |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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