Correlation Between Connect Biopharma and XOMA
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and XOMA 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 XOMA 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 XOMA Corporation, you can compare the effects of market volatilities on Connect Biopharma and XOMA 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 XOMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and XOMA.
Diversification Opportunities for Connect Biopharma and XOMA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Connect and XOMA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA 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 XOMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and XOMA go up and down completely randomly.
Pair Corralation between Connect Biopharma and XOMA
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the XOMA. In addition to that, Connect Biopharma is 26.89 times more volatile than XOMA Corporation. It trades about -0.06 of its total potential returns per unit of risk. XOMA Corporation is currently generating about -0.21 per unit of volatility. If you would invest 2,560 in XOMA Corporation on September 1, 2024 and sell it today you would lose (21.00) from holding XOMA Corporation or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. XOMA Corp.
Performance |
| Timeline |
| Connect Biopharma |
| XOMA |
Connect Biopharma and XOMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and XOMA
The main advantage of trading using opposite Connect Biopharma and XOMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, XOMA 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 XOMA will offset losses from the drop in XOMA's long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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