Correlation Between Rallybio Corp and RAPT Therapeutics
Can any of the company-specific risk be diversified away by investing in both Rallybio Corp and RAPT Therapeutics 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 Rallybio Corp and RAPT Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rallybio Corp and RAPT Therapeutics, you can compare the effects of market volatilities on Rallybio Corp and RAPT Therapeutics 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 Rallybio Corp with a short position of RAPT Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rallybio Corp and RAPT Therapeutics.
Diversification Opportunities for Rallybio Corp and RAPT Therapeutics
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rallybio and RAPT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rallybio Corp and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and Rallybio Corp 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 Rallybio Corp are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Rallybio Corp i.e., Rallybio Corp and RAPT Therapeutics go up and down completely randomly.
Pair Corralation between Rallybio Corp and RAPT Therapeutics
Given the investment horizon of 90 days Rallybio Corp is expected to generate 1.01 times more return on investment than RAPT Therapeutics. However, Rallybio Corp is 1.01 times more volatile than RAPT Therapeutics. It trades about -0.02 of its potential returns per unit of risk. RAPT Therapeutics is currently generating about -0.04 per unit of risk. If you would invest 631.00 in Rallybio Corp on September 4, 2024 and sell it today you would lose (518.00) from holding Rallybio Corp or give up 82.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rallybio Corp vs. RAPT Therapeutics
Performance |
| Timeline |
| Rallybio Corp |
| RAPT Therapeutics |
Rallybio Corp and RAPT Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rallybio Corp and RAPT Therapeutics
The main advantage of trading using opposite Rallybio Corp and RAPT Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rallybio Corp position performs unexpectedly, RAPT Therapeutics 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 RAPT Therapeutics will offset losses from the drop in RAPT Therapeutics' long position.| Rallybio Corp vs. Century Therapeutics | Rallybio Corp vs. Edgewise Therapeutics | Rallybio Corp vs. C4 Therapeutics | Rallybio Corp vs. Mineralys Therapeutics, Common |
| RAPT Therapeutics vs. Connect Biopharma Holdings | RAPT Therapeutics vs. Tyra Biosciences | RAPT Therapeutics vs. Xilio Development | RAPT Therapeutics vs. Mineralys Therapeutics, Common |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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