Correlation Between CHIE and Immatics

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

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

Diversification Opportunities for CHIE and Immatics

-0.65

Correlation Coefficient

CHIE  Immatics

Excellent diversification

The 3 months correlation between CHIE and Immatics is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding CHIE and Immatics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immatics NV and CHIE 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 CHIE are associated (or correlated) with Immatics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immatics NV has no effect on the direction of CHIE i.e., CHIE and Immatics go up and down completely randomly.

Pair Corralation between CHIE and Immatics

Given the investment horizon of 90 days CHIE is expected to generate 18.61 times more return on investment than Immatics. However, CHIE is 18.61 times more volatile than Immatics NV. It trades about 0.06 of its potential returns per unit of risk. Immatics NV is currently generating about 0.04 per unit of risk. If you would invest  27,698  in CHIE on February 9, 2024 and sell it today you would lose (26,059) from holding CHIE or give up 94.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.09%
Values	Daily Returns

CHIE  vs.  Immatics NV

CHIE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, CHIE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Immatics NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immatics NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Immatics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CHIE and Immatics

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

The idea behind CHIE and Immatics NV 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.