Correlation Between Durect and Adaptive Biotechnologies

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

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

Diversification Opportunities for Durect and Adaptive Biotechnologies

-0.2

Correlation Coefficient

Durect  Adaptive Biotechnologies

Good diversification

The 3 months correlation between Durect and Adaptive is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Durect and Adaptive Biotechnologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Biotechnologies and Durect 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 Durect are associated (or correlated) with Adaptive Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Biotechnologies has no effect on the direction of Durect i.e., Durect and Adaptive Biotechnologies go up and down completely randomly.

Pair Corralation between Durect and Adaptive Biotechnologies

Given the investment horizon of 90 days Durect is expected to generate 1.54 times more return on investment than Adaptive Biotechnologies. However, Durect is 1.54 times more volatile than Adaptive Biotechnologies Corp. It trades about -0.02 of its potential returns per unit of risk. Adaptive Biotechnologies Corp is currently generating about -0.07 per unit of risk. If you would invest  441.00  in Durect on January 26, 2024 and sell it today you would lose (352.65) from holding Durect or give up 79.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Durect  vs.  Adaptive Biotechnologies Corp

Durect

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Durect are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Durect showed solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal 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.

Pair Trading with Durect and Adaptive Biotechnologies

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

The idea behind Durect and Adaptive Biotechnologies Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.