Correlation Between Revolution Medicines and WuXi Biologics
Can any of the company-specific risk be diversified away by investing in both Revolution Medicines and WuXi 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 Revolution Medicines and WuXi Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Revolution Medicines and WuXi Biologics, you can compare the effects of market volatilities on Revolution Medicines and WuXi 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 Revolution Medicines with a short position of WuXi Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolution Medicines and WuXi Biologics.
Diversification Opportunities for Revolution Medicines and WuXi Biologics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Revolution and WuXi is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and WuXi Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi Biologics and Revolution Medicines 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 Revolution Medicines are associated (or correlated) with WuXi Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi Biologics has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and WuXi Biologics go up and down completely randomly.
Pair Corralation between Revolution Medicines and WuXi Biologics
Given the investment horizon of 90 days Revolution Medicines is expected to under-perform the WuXi Biologics. In addition to that, Revolution Medicines is 1.06 times more volatile than WuXi Biologics. It trades about -0.1 of its total potential returns per unit of risk. WuXi Biologics is currently generating about -0.1 per unit of volatility. If you would invest 428.00 in WuXi Biologics on September 4, 2024 and sell it today you would lose (28.00) from holding WuXi Biologics or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Revolution Medicines vs. WuXi Biologics
Performance |
| Timeline |
| Revolution Medicines |
| WuXi Biologics |
Revolution Medicines and WuXi Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Revolution Medicines and WuXi Biologics
The main advantage of trading using opposite Revolution Medicines and WuXi Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolution Medicines position performs unexpectedly, WuXi 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 WuXi Biologics will offset losses from the drop in WuXi Biologics' long position.| Revolution Medicines vs. Blueprint Medicines Corp | Revolution Medicines vs. Sana Biotechnology | Revolution Medicines vs. Kymera Therapeutics | Revolution Medicines vs. Monte Rosa Therapeutics |
| WuXi Biologics vs. Inhibikase Therapeutics | WuXi Biologics vs. Corcept Therapeutics Incorporated | WuXi Biologics vs. Cardio Diagnostics Holdings | WuXi Biologics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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