Correlation Between Terns Pharmaceuticals and MAIA Biotechnology
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals and MAIA 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 Terns Pharmaceuticals and MAIA Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and MAIA Biotechnology, you can compare the effects of market volatilities on Terns Pharmaceuticals and MAIA 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 Terns Pharmaceuticals with a short position of MAIA Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and MAIA Biotechnology.
Diversification Opportunities for Terns Pharmaceuticals and MAIA Biotechnology
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Terns and MAIA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and MAIA Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAIA Biotechnology and Terns Pharmaceuticals 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 Terns Pharmaceuticals are associated (or correlated) with MAIA Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAIA Biotechnology has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and MAIA Biotechnology go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and MAIA Biotechnology
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to under-perform the MAIA Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Terns Pharmaceuticals is 1.35 times less risky than MAIA Biotechnology. The stock trades about -0.3 of its potential returns per unit of risk. The MAIA Biotechnology is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 223.00 in MAIA Biotechnology on November 4, 2024 and sell it today you would lose (35.00) from holding MAIA Biotechnology or give up 15.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. MAIA Biotechnology
Performance |
| Timeline |
| Terns Pharmaceuticals |
| MAIA Biotechnology |
Terns Pharmaceuticals and MAIA Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and MAIA Biotechnology
The main advantage of trading using opposite Terns Pharmaceuticals and MAIA Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals position performs unexpectedly, MAIA 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 MAIA Biotechnology will offset losses from the drop in MAIA Biotechnology's long position.| Terns Pharmaceuticals vs. Amylyx Pharmaceuticals | Terns Pharmaceuticals vs. Acumen Pharmaceuticals | Terns Pharmaceuticals vs. Inozyme Pharma | Terns Pharmaceuticals vs. X4 Pharmaceuticals |
| MAIA Biotechnology vs. Lineage Cell Therapeutics | MAIA Biotechnology vs. Armata Pharmaceuticals | MAIA Biotechnology vs. Portage Biotech | MAIA Biotechnology vs. Larimar 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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