Correlation Between Abeona Therapeutics and Adaptimmune Therapeutics

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

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

Diversification Opportunities for Abeona Therapeutics and Adaptimmune Therapeutics

0.66

Correlation Coefficient

Abeona Therapeutics  Adaptimmune Therapeutics

Poor diversification

The 3 months correlation between Abeona and Adaptimmune is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Abeona Therapeutics and Adaptimmune Therapeutics Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptimmune Therapeutics and Abeona Therapeutics 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 Abeona Therapeutics are associated (or correlated) with Adaptimmune Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptimmune Therapeutics has no effect on the direction of Abeona Therapeutics i.e., Abeona Therapeutics and Adaptimmune Therapeutics go up and down completely randomly.

Pair Corralation between Abeona Therapeutics and Adaptimmune Therapeutics

Given the investment horizon of 90 days Abeona Therapeutics is expected to under-perform the Adaptimmune Therapeutics. In addition to that, Abeona Therapeutics is 2.05 times more volatile than Adaptimmune Therapeutics Plc. It trades about -0.2 of its total potential returns per unit of risk. Adaptimmune Therapeutics Plc is currently generating about -0.15 per unit of volatility. If you would invest  144.00  in Adaptimmune Therapeutics Plc on January 25, 2024 and sell it today you would lose (30.00) from holding Adaptimmune Therapeutics Plc or give up 20.83% of portfolio value over 90 days.

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

Abeona Therapeutics  vs.  Adaptimmune Therapeutics Plc

Abeona Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abeona Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Abeona Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Adaptimmune Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adaptimmune Therapeutics Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Adaptimmune Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abeona Therapeutics and Adaptimmune Therapeutics

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

The idea behind Abeona Therapeutics and Adaptimmune Therapeutics Plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.