Correlation Between Eterna Therapeutics and Corbus Pharmaceuticals

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

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

Diversification Opportunities for Eterna Therapeutics and Corbus Pharmaceuticals

0.72

Correlation Coefficient

Eterna Therapeutics  Corbus Pharmaceuticals

Poor diversification

The 3 months correlation between Eterna and Corbus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Corbus Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbus Pharmaceuticals and Eterna 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 Eterna Therapeutics are associated (or correlated) with Corbus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbus Pharmaceuticals has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Corbus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Corbus Pharmaceuticals

Given the investment horizon of 90 days Eterna Therapeutics is expected to generate 2.68 times less return on investment than Corbus Pharmaceuticals. But when comparing it to its historical volatility, Eterna Therapeutics is 1.16 times less risky than Corbus Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Corbus Pharmaceuticals Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,330  in Corbus Pharmaceuticals Holding on February 19, 2024 and sell it today you would earn a total of  2,170  from holding Corbus Pharmaceuticals Holding or generate 93.13% return on investment over 90 days.

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

Eterna Therapeutics  vs.  Corbus Pharmaceuticals Holding

Eterna Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eterna Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Eterna Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Corbus Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corbus Pharmaceuticals Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Corbus Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eterna Therapeutics and Corbus Pharmaceuticals

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

The idea behind Eterna Therapeutics and Corbus Pharmaceuticals Holding 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.