Correlation Between XOMA and Tempest Therapeutics
Can any of the company-specific risk be diversified away by investing in both XOMA and Tempest 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 XOMA and Tempest Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XOMA Corporation and Tempest Therapeutics, you can compare the effects of market volatilities on XOMA and Tempest 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 XOMA with a short position of Tempest Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA and Tempest Therapeutics.
Diversification Opportunities for XOMA and Tempest Therapeutics
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between XOMA and Tempest is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Therapeutics and XOMA 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 XOMA Corporation are associated (or correlated) with Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of XOMA i.e., XOMA and Tempest Therapeutics go up and down completely randomly.
Pair Corralation between XOMA and Tempest Therapeutics
Assuming the 90 days horizon XOMA is expected to generate 13.79 times less return on investment than Tempest Therapeutics. But when comparing it to its historical volatility, XOMA Corporation is 9.53 times less risky than Tempest Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Tempest Therapeutics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Tempest Therapeutics on October 23, 2024 and sell it today you would earn a total of 8.00 from holding Tempest Therapeutics or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XOMA Corp. vs. Tempest Therapeutics
Performance |
| Timeline |
| XOMA |
| Tempest Therapeutics |
XOMA and Tempest Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XOMA and Tempest Therapeutics
The main advantage of trading using opposite XOMA and Tempest Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA position performs unexpectedly, Tempest 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 Tempest Therapeutics will offset losses from the drop in Tempest Therapeutics' long position.The idea behind XOMA Corporation and Tempest Therapeutics 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.| Tempest Therapeutics vs. Indaptus Therapeutics | Tempest Therapeutics vs. Rezolute | Tempest Therapeutics vs. Forte Biosciences | Tempest Therapeutics vs. Sana Biotechnology |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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