Correlation Between Adaptive Biotechnologies and Avantor

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

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

Diversification Opportunities for Adaptive Biotechnologies and Avantor

-0.54

Correlation Coefficient

Adaptive Biotechnologies  Avantor

Excellent diversification

The 3 months correlation between Adaptive and Avantor is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Adaptive Biotechnologies Corp and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Adaptive Biotechnologies 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 Adaptive Biotechnologies Corp are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Adaptive Biotechnologies i.e., Adaptive Biotechnologies and Avantor go up and down completely randomly.

Pair Corralation between Adaptive Biotechnologies and Avantor

Given the investment horizon of 90 days Adaptive Biotechnologies Corp is expected to under-perform the Avantor. In addition to that, Adaptive Biotechnologies is 2.43 times more volatile than Avantor. It trades about -0.02 of its total potential returns per unit of risk. Avantor is currently generating about -0.01 per unit of volatility. If you would invest  3,072  in Avantor on January 25, 2024 and sell it today you would lose (507.00) from holding Avantor or give up 16.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Adaptive Biotechnologies Corp  vs.  Avantor

Adaptive Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Biotechnologies Corp 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 basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Avantor

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Adaptive Biotechnologies and Avantor

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

The idea behind Adaptive Biotechnologies Corp and Avantor 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.