Correlation Between Homology Medicines and Black Diamond

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

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

Diversification Opportunities for Homology Medicines and Black Diamond

0.19

Correlation Coefficient

Homology Medicines  Black Diamond

Average diversification

The 3 months correlation between Homology and Black is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Homology Medicines and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap and Homology Medicines 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 Homology Medicines are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Homology Medicines i.e., Homology Medicines and Black Diamond go up and down completely randomly.

Pair Corralation between Homology Medicines and Black Diamond

If you would invest (100.00) in Homology Medicines on February 17, 2024 and sell it today you would earn a total of  100.00  from holding Homology Medicines or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Homology Medicines  vs.  Black Diamond Therapeutics

Homology Medicines

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Homology Medicines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Homology Medicines showed solid returns over the last few months and may actually be approaching a breakup point.

Black Diamond Therap

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Diamond Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Black Diamond showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Homology Medicines and Black Diamond

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

The idea behind Homology Medicines and Black Diamond 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.