Correlation Between Connect Biopharma and Fulcrum Therapeutics
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Fulcrum Therapeutics 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 Connect Biopharma and Fulcrum Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Fulcrum Therapeutics, you can compare the effects of market volatilities on Connect Biopharma and Fulcrum Therapeutics 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 Connect Biopharma with a short position of Fulcrum Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Fulcrum Therapeutics.
Diversification Opportunities for Connect Biopharma and Fulcrum Therapeutics
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Connect and Fulcrum is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Fulcrum Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Therapeutics and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with Fulcrum Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Therapeutics has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Fulcrum Therapeutics go up and down completely randomly.
Pair Corralation between Connect Biopharma and Fulcrum Therapeutics
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to generate 1.3 times more return on investment than Fulcrum Therapeutics. However, Connect Biopharma is 1.3 times more volatile than Fulcrum Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Fulcrum Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 88.00 in Connect Biopharma Holdings on September 12, 2024 and sell it today you would earn a total of 25.00 from holding Connect Biopharma Holdings or generate 28.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Fulcrum Therapeutics
Performance |
| Timeline |
| Connect Biopharma |
| Fulcrum Therapeutics |
Connect Biopharma and Fulcrum Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Fulcrum Therapeutics
The main advantage of trading using opposite Connect Biopharma and Fulcrum Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Fulcrum Therapeutics 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 Fulcrum Therapeutics will offset losses from the drop in Fulcrum Therapeutics' long position.| Connect Biopharma vs. Equillium | Connect Biopharma vs. DiaMedica Therapeutics | Connect Biopharma vs. Valneva SE ADR | Connect Biopharma vs. Vivani Medical |
| Fulcrum Therapeutics vs. RAPT Therapeutics | Fulcrum Therapeutics vs. Mirum Pharmaceuticals | Fulcrum Therapeutics vs. BeyondSpring | Fulcrum Therapeutics vs. Stoke 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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