Correlation Between Equillium and Adicet Bio

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

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

Diversification Opportunities for Equillium and Adicet Bio

0.73

Correlation Coefficient

Equillium  Adicet Bio

Poor diversification

The 3 months correlation between Equillium and Adicet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Adicet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adicet Bio and Equillium 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 Equillium are associated (or correlated) with Adicet Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adicet Bio has no effect on the direction of Equillium i.e., Equillium and Adicet Bio go up and down completely randomly.

Pair Corralation between Equillium and Adicet Bio

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.17 times more return on investment than Adicet Bio. However, Equillium is 1.17 times more volatile than Adicet Bio. It trades about -0.07 of its potential returns per unit of risk. Adicet Bio is currently generating about -0.13 per unit of risk. If you would invest  223.00  in Equillium on March 2, 2024 and sell it today you would lose (73.00) from holding Equillium or give up 32.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Equillium  vs.  Adicet Bio

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Adicet Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adicet Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Equillium and Adicet Bio

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

The idea behind Equillium and Adicet Bio 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.