Correlation Between Connect Biopharma and RAPT Therapeutics
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and RAPT 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 RAPT 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 RAPT Therapeutics, you can compare the effects of market volatilities on Connect Biopharma and RAPT 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 RAPT Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and RAPT Therapeutics.
Diversification Opportunities for Connect Biopharma and RAPT Therapeutics
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Connect and RAPT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT 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 RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and RAPT Therapeutics go up and down completely randomly.
Pair Corralation between Connect Biopharma and RAPT Therapeutics
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to generate 0.4 times more return on investment than RAPT Therapeutics. However, Connect Biopharma Holdings is 2.47 times less risky than RAPT Therapeutics. It trades about -0.23 of its potential returns per unit of risk. RAPT Therapeutics is currently generating about -0.15 per unit of risk. If you would invest 126.00 in Connect Biopharma Holdings on August 28, 2024 and sell it today you would lose (28.00) from holding Connect Biopharma Holdings or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. RAPT Therapeutics
Performance |
| Timeline |
| Connect Biopharma |
| RAPT Therapeutics |
Connect Biopharma and RAPT Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and RAPT Therapeutics
The main advantage of trading using opposite Connect Biopharma and RAPT Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, RAPT 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 RAPT Therapeutics will offset losses from the drop in RAPT Therapeutics' long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
| RAPT Therapeutics vs. Connect Biopharma Holdings | RAPT Therapeutics vs. Tyra Biosciences | RAPT Therapeutics vs. Xilio Development | RAPT Therapeutics vs. Mineralys Therapeutics, Common |
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 Stocks Directory module to find actively traded stocks across global markets.
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