Correlation Between Innovent Biologics and Nautilus Biotechnology
Can any of the company-specific risk be diversified away by investing in both Innovent Biologics and Nautilus Biotechnology 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 Innovent Biologics and Nautilus Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovent Biologics and Nautilus Biotechnology, you can compare the effects of market volatilities on Innovent Biologics and Nautilus Biotechnology 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 Innovent Biologics with a short position of Nautilus Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovent Biologics and Nautilus Biotechnology.
Diversification Opportunities for Innovent Biologics and Nautilus Biotechnology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovent and Nautilus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Innovent Biologics and Nautilus Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nautilus Biotechnology and Innovent Biologics 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 Innovent Biologics are associated (or correlated) with Nautilus Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nautilus Biotechnology has no effect on the direction of Innovent Biologics i.e., Innovent Biologics and Nautilus Biotechnology go up and down completely randomly.
Pair Corralation between Innovent Biologics and Nautilus Biotechnology
Assuming the 90 days horizon Innovent Biologics is expected to generate 1.16 times more return on investment than Nautilus Biotechnology. However, Innovent Biologics is 1.16 times more volatile than Nautilus Biotechnology. It trades about -0.02 of its potential returns per unit of risk. Nautilus Biotechnology is currently generating about -0.22 per unit of risk. If you would invest 508.00 in Innovent Biologics on August 29, 2024 and sell it today you would lose (23.00) from holding Innovent Biologics or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovent Biologics vs. Nautilus Biotechnology
Performance |
| Timeline |
| Innovent Biologics |
| Nautilus Biotechnology |
Innovent Biologics and Nautilus Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovent Biologics and Nautilus Biotechnology
The main advantage of trading using opposite Innovent Biologics and Nautilus Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovent Biologics position performs unexpectedly, Nautilus Biotechnology 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 Nautilus Biotechnology will offset losses from the drop in Nautilus Biotechnology's long position.The idea behind Innovent Biologics and Nautilus Biotechnology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nautilus Biotechnology vs. C4 Therapeutics | Nautilus Biotechnology vs. Kymera Therapeutics | Nautilus Biotechnology vs. Foghorn Therapeutics | Nautilus Biotechnology vs. Revolution Medicines |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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