Correlation Between EDAP TMS and Adicet Bio
Can any of the company-specific risk be diversified away by investing in both EDAP TMS and Adicet Bio 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 EDAP TMS and Adicet Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Adicet Bio, you can compare the effects of market volatilities on EDAP TMS and Adicet Bio 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 EDAP TMS with a short position of Adicet Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Adicet Bio.
Diversification Opportunities for EDAP TMS and Adicet Bio
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EDAP and Adicet is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Adicet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adicet Bio and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Adicet Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adicet Bio has no effect on the direction of EDAP TMS i.e., EDAP TMS and Adicet Bio go up and down completely randomly.
Pair Corralation between EDAP TMS and Adicet Bio
Given the investment horizon of 90 days EDAP TMS is expected to generate 13.23 times less return on investment than Adicet Bio. But when comparing it to its historical volatility, EDAP TMS SA is 1.05 times less risky than Adicet Bio. It trades about 0.01 of its potential returns per unit of risk. Adicet Bio is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Adicet Bio on October 20, 2024 and sell it today you would earn a total of 5.00 from holding Adicet Bio or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDAP TMS SA vs. Adicet Bio
Performance |
| Timeline |
| EDAP TMS SA |
| Adicet Bio |
EDAP TMS and Adicet Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDAP TMS and Adicet Bio
The main advantage of trading using opposite EDAP TMS and Adicet Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS position performs unexpectedly, Adicet Bio 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 Adicet Bio will offset losses from the drop in Adicet Bio's long position.| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
| Adicet Bio vs. Edgewise Therapeutics | Adicet Bio vs. Cullinan Oncology LLC | Adicet Bio vs. Vor Biopharma | Adicet Bio vs. Tenaya 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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