Correlation Between Orchestra BioMed and Innovent Biologics
Can any of the company-specific risk be diversified away by investing in both Orchestra BioMed and Innovent Biologics 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 Orchestra BioMed and Innovent Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orchestra BioMed Holdings and Innovent Biologics, you can compare the effects of market volatilities on Orchestra BioMed and Innovent Biologics 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 Orchestra BioMed with a short position of Innovent Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchestra BioMed and Innovent Biologics.
Diversification Opportunities for Orchestra BioMed and Innovent Biologics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orchestra and Innovent is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Orchestra BioMed Holdings and Innovent Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovent Biologics and Orchestra BioMed 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 Orchestra BioMed Holdings are associated (or correlated) with Innovent Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovent Biologics has no effect on the direction of Orchestra BioMed i.e., Orchestra BioMed and Innovent Biologics go up and down completely randomly.
Pair Corralation between Orchestra BioMed and Innovent Biologics
Given the investment horizon of 90 days Orchestra BioMed Holdings is expected to generate 1.23 times more return on investment than Innovent Biologics. However, Orchestra BioMed is 1.23 times more volatile than Innovent Biologics. It trades about 0.08 of its potential returns per unit of risk. Innovent Biologics is currently generating about 0.08 per unit of risk. If you would invest 529.00 in Orchestra BioMed Holdings on September 2, 2024 and sell it today you would earn a total of 34.00 from holding Orchestra BioMed Holdings or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Orchestra BioMed Holdings vs. Innovent Biologics
Performance |
| Timeline |
| Orchestra BioMed Holdings |
| Innovent Biologics |
Orchestra BioMed and Innovent Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orchestra BioMed and Innovent Biologics
The main advantage of trading using opposite Orchestra BioMed and Innovent Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchestra BioMed position performs unexpectedly, Innovent Biologics 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 Innovent Biologics will offset losses from the drop in Innovent Biologics' long position.| Orchestra BioMed vs. Thai Beverage PCL | Orchestra BioMed vs. Aterian | Orchestra BioMed vs. Westrock Coffee | Orchestra BioMed vs. Keurig Dr Pepper |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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