Correlation Between InhibrxInc and Brickell Biotech

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

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

Diversification Opportunities for InhibrxInc and Brickell Biotech

0.58

Correlation Coefficient

InhibrxInc  Brickell Biotech

Very weak diversification

The 3 months correlation between InhibrxInc and Brickell is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding InhibrxInc and Brickell Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech and InhibrxInc 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 InhibrxInc are associated (or correlated) with Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of InhibrxInc i.e., InhibrxInc and Brickell Biotech go up and down completely randomly.

Pair Corralation between InhibrxInc and Brickell Biotech

Given the investment horizon of 90 days InhibrxInc is expected to under-perform the Brickell Biotech. But the stock apears to be less risky and, when comparing its historical volatility, InhibrxInc is 3.31 times less risky than Brickell Biotech. The stock trades about -0.17 of its potential returns per unit of risk. The Brickell Biotech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Brickell Biotech on January 26, 2024 and sell it today you would earn a total of  2.00  from holding Brickell Biotech or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

InhibrxInc  vs.  Brickell Biotech

InhibrxInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InhibrxInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Brickell Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with InhibrxInc and Brickell Biotech

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

The idea behind InhibrxInc and Brickell Biotech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.