Correlation Between Unity Biotechnology and Shattuck Labs

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Can any of the company-specific risk be diversified away by investing in both Unity Biotechnology and Shattuck Labs 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 Unity Biotechnology and Shattuck Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Biotechnology and Shattuck Labs, you can compare the effects of market volatilities on Unity Biotechnology and Shattuck Labs 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 Unity Biotechnology with a short position of Shattuck Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Biotechnology and Shattuck Labs.

Diversification Opportunities for Unity Biotechnology and Shattuck Labs

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Unity and Shattuck is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Unity Biotechnology and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs and Unity Biotechnology 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 Unity Biotechnology are associated (or correlated) with Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of Unity Biotechnology i.e., Unity Biotechnology and Shattuck Labs go up and down completely randomly.

Pair Corralation between Unity Biotechnology and Shattuck Labs

Considering the 90-day investment horizon Unity Biotechnology is expected to generate 0.59 times more return on investment than Shattuck Labs. However, Unity Biotechnology is 1.7 times less risky than Shattuck Labs. It trades about -0.12 of its potential returns per unit of risk. Shattuck Labs is currently generating about -0.09 per unit of risk. If you would invest  136.00  in Unity Biotechnology on September 1, 2024 and sell it today you would lose (12.00) from holding Unity Biotechnology or give up 8.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Unity Biotechnology  vs.  Shattuck Labs

 Performance 
       Timeline  
Unity Biotechnology 

Risk-Adjusted Performance

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Over the last 90 days Unity Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Shattuck Labs 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Shattuck Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Unity Biotechnology and Shattuck Labs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Unity Biotechnology and Shattuck Labs

The main advantage of trading using opposite Unity Biotechnology and Shattuck Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Biotechnology position performs unexpectedly, Shattuck Labs 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 Shattuck Labs will offset losses from the drop in Shattuck Labs' long position.
The idea behind Unity Biotechnology and Shattuck Labs 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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