Correlation Between Decibel Therapeutics and Protalix Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Decibel Therapeutics and Protalix Biotherapeutics 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 Decibel Therapeutics and Protalix Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decibel Therapeutics and Protalix Biotherapeutics, you can compare the effects of market volatilities on Decibel Therapeutics and Protalix Biotherapeutics 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 Decibel Therapeutics with a short position of Protalix Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decibel Therapeutics and Protalix Biotherapeutics.
Diversification Opportunities for Decibel Therapeutics and Protalix Biotherapeutics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Decibel and Protalix is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Therapeutics and Protalix Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protalix Biotherapeutics and Decibel 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 Decibel Therapeutics are associated (or correlated) with Protalix Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protalix Biotherapeutics has no effect on the direction of Decibel Therapeutics i.e., Decibel Therapeutics and Protalix Biotherapeutics go up and down completely randomly.
Pair Corralation between Decibel Therapeutics and Protalix Biotherapeutics
Given the investment horizon of 90 days Decibel Therapeutics is expected to generate 1.45 times more return on investment than Protalix Biotherapeutics. However, Decibel Therapeutics is 1.45 times more volatile than Protalix Biotherapeutics. It trades about 0.06 of its potential returns per unit of risk. Protalix Biotherapeutics is currently generating about 0.04 per unit of risk. If you would invest 240.00 in Decibel Therapeutics on September 3, 2024 and sell it today you would earn a total of 68.00 from holding Decibel Therapeutics or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.91% |
| Values | Daily Returns |
Decibel Therapeutics vs. Protalix Biotherapeutics
Performance |
| Timeline |
| Decibel Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Protalix Biotherapeutics |
Decibel Therapeutics and Protalix Biotherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decibel Therapeutics and Protalix Biotherapeutics
The main advantage of trading using opposite Decibel Therapeutics and Protalix Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decibel Therapeutics position performs unexpectedly, Protalix Biotherapeutics 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 Protalix Biotherapeutics will offset losses from the drop in Protalix Biotherapeutics' long position.| Decibel Therapeutics vs. Werewolf Therapeutics | Decibel Therapeutics vs. Edgewise Therapeutics | Decibel Therapeutics vs. Celcuity LLC | Decibel Therapeutics vs. C4 Therapeutics |
| Protalix Biotherapeutics vs. DiaMedica Therapeutics | Protalix Biotherapeutics vs. Lyra Therapeutics | Protalix Biotherapeutics vs. Centessa Pharmaceuticals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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