Correlation Between Jaguar Animal and Precision BioSciences

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

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

Diversification Opportunities for Jaguar Animal and Precision BioSciences

-0.29

Correlation Coefficient

Jaguar Animal  Precision BioSciences

Very good diversification

The 3 months correlation between Jaguar and Precision is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Jaguar Animal Health and Precision BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision BioSciences and Jaguar Animal 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 Jaguar Animal Health 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 Jaguar Animal i.e., Jaguar Animal and Precision BioSciences go up and down completely randomly.

Pair Corralation between Jaguar Animal and Precision BioSciences

Given the investment horizon of 90 days Jaguar Animal Health is expected to under-perform the Precision BioSciences. In addition to that, Jaguar Animal is 1.56 times more volatile than Precision BioSciences. It trades about -0.08 of its total potential returns per unit of risk. Precision BioSciences is currently generating about -0.03 per unit of volatility. If you would invest  6,270  in Precision BioSciences on January 18, 2024 and sell it today you would lose (4,983) from holding Precision BioSciences or give up 79.47% of portfolio value over 90 days.

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

Jaguar Animal Health  vs.  Precision BioSciences

Jaguar Animal Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaguar Animal Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jaguar Animal showed solid returns over the last few months and may actually be approaching a breakup point.

Precision BioSciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision BioSciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Precision BioSciences disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jaguar Animal and Precision BioSciences

The main advantage of trading using opposite Jaguar Animal and Precision BioSciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jaguar Animal 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 Jaguar Animal Health 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.