Correlation Between Connect Biopharma and LianBio ADR
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and LianBio ADR 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 LianBio ADR 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 LianBio ADR, you can compare the effects of market volatilities on Connect Biopharma and LianBio ADR 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 LianBio ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and LianBio ADR.
Diversification Opportunities for Connect Biopharma and LianBio ADR
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Connect and LianBio is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and LianBio ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianBio ADR 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 LianBio ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianBio ADR has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and LianBio ADR go up and down completely randomly.
Pair Corralation between Connect Biopharma and LianBio ADR
If you would invest 218.00 in LianBio ADR on August 28, 2024 and sell it today you would earn a total of 0.00 from holding LianBio ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. LianBio ADR
Performance |
| Timeline |
| Connect Biopharma |
| LianBio ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Connect Biopharma and LianBio ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and LianBio ADR
The main advantage of trading using opposite Connect Biopharma and LianBio ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, LianBio ADR 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 LianBio ADR will offset losses from the drop in LianBio ADR's long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
| LianBio ADR vs. Sensei Biotherapeutics | LianBio ADR vs. NextCure | LianBio ADR vs. Nuvation Bio | LianBio ADR vs. Inozyme Pharma |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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