Correlation Between PolyPid and In8bioInc

Can any of the company-specific risk be diversified away by investing in both PolyPid and In8bioInc 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 PolyPid and In8bioInc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PolyPid and In8bioInc, you can compare the effects of market volatilities on PolyPid and In8bioInc 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 PolyPid with a short position of In8bioInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PolyPid and In8bioInc.

Diversification Opportunities for PolyPid and In8bioInc

0.42

Correlation Coefficient

PolyPid  In8bioInc

Very weak diversification

The 3 months correlation between PolyPid and In8bioInc is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PolyPid and In8bioInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on In8bioInc and PolyPid 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 PolyPid are associated (or correlated) with In8bioInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of In8bioInc has no effect on the direction of PolyPid i.e., PolyPid and In8bioInc go up and down completely randomly.

Pair Corralation between PolyPid and In8bioInc

Given the investment horizon of 90 days PolyPid is expected to generate 1.11 times more return on investment than In8bioInc. However, PolyPid is 1.11 times more volatile than In8bioInc. It trades about 0.04 of its potential returns per unit of risk. In8bioInc is currently generating about -0.09 per unit of risk. If you would invest  425.00  in PolyPid on February 9, 2024 and sell it today you would earn a total of  6.00  from holding PolyPid or generate 1.41% return on investment over 90 days.

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

PolyPid  vs.  In8bioInc

PolyPid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PolyPid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

In8bioInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days In8bioInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PolyPid and In8bioInc

The main advantage of trading using opposite PolyPid and In8bioInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PolyPid position performs unexpectedly, In8bioInc 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 In8bioInc will offset losses from the drop in In8bioInc's long position.

The idea behind PolyPid and In8bioInc 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.