Correlation Between Compugen and Precision BioSciences

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Can any of the company-specific risk be diversified away by investing in both Compugen and Precision BioSciences 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 Compugen and Precision BioSciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugen and Precision BioSciences, you can compare the effects of market volatilities on Compugen and Precision BioSciences 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 Compugen with a short position of Precision BioSciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugen and Precision BioSciences.

Diversification Opportunities for Compugen and Precision BioSciences

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Compugen and Precision is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Compugen and Precision BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision BioSciences and Compugen 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 Compugen are associated (or correlated) with Precision BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision BioSciences has no effect on the direction of Compugen i.e., Compugen and Precision BioSciences go up and down completely randomly.

Pair Corralation between Compugen and Precision BioSciences

Given the investment horizon of 90 days Compugen is expected to generate 1.71 times more return on investment than Precision BioSciences. However, Compugen is 1.71 times more volatile than Precision BioSciences. It trades about 0.04 of its potential returns per unit of risk. Precision BioSciences is currently generating about -0.02 per unit of risk. If you would invest  190.00  in Compugen on December 30, 2023 and sell it today you would earn a total of  68.00  from holding Compugen or generate 35.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Compugen  vs.  Precision BioSciences

 Performance 
       Timeline  
Compugen 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Compugen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Compugen displayed solid returns over the last few months and may actually be approaching a breakup point.
Precision BioSciences 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Precision BioSciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, Precision BioSciences disclosed solid returns over the last few months and may actually be approaching a breakup point.

Compugen and Precision BioSciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compugen and Precision BioSciences

The main advantage of trading using opposite Compugen and Precision BioSciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugen position performs unexpectedly, Precision BioSciences 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 Precision BioSciences will offset losses from the drop in Precision BioSciences' long position.
The idea behind Compugen and Precision BioSciences 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.
Check out your portfolio center.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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