Correlation Between Assembly Biosciences and Chimerix

Can any of the company-specific risk be diversified away by investing in both Assembly Biosciences and Chimerix 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 Assembly Biosciences and Chimerix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assembly Biosciences and Chimerix, you can compare the effects of market volatilities on Assembly Biosciences and Chimerix 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 Assembly Biosciences with a short position of Chimerix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assembly Biosciences and Chimerix.

Diversification Opportunities for Assembly Biosciences and Chimerix

-0.36

Correlation Coefficient

Assembly Biosciences  Chimerix

Very good diversification

The 3 months correlation between Assembly and Chimerix is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Assembly Biosciences and Chimerix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimerix and Assembly Biosciences 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 Assembly Biosciences are associated (or correlated) with Chimerix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimerix has no effect on the direction of Assembly Biosciences i.e., Assembly Biosciences and Chimerix go up and down completely randomly.

Pair Corralation between Assembly Biosciences and Chimerix

Given the investment horizon of 90 days Assembly Biosciences is expected to generate 1.4 times more return on investment than Chimerix. However, Assembly Biosciences is 1.4 times more volatile than Chimerix. It trades about 0.08 of its potential returns per unit of risk. Chimerix is currently generating about -0.25 per unit of risk. If you would invest  1,461  in Assembly Biosciences on March 16, 2024 and sell it today you would earn a total of  52.00  from holding Assembly Biosciences or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Assembly Biosciences  vs.  Chimerix

Assembly Biosciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assembly Biosciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Assembly Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Chimerix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Assembly Biosciences and Chimerix

The main advantage of trading using opposite Assembly Biosciences and Chimerix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assembly Biosciences position performs unexpectedly, Chimerix 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 Chimerix will offset losses from the drop in Chimerix's long position.

The idea behind Assembly Biosciences and Chimerix 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.

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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.