Correlation Between TransMedics and Adicet Bio

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

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

Diversification Opportunities for TransMedics and Adicet Bio

-0.87

Correlation Coefficient

TransMedics  Adicet Bio

Pay attention - limited upside

The 3 months correlation between TransMedics and Adicet is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Adicet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adicet Bio and TransMedics 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 TransMedics Group are associated (or correlated) with Adicet Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adicet Bio has no effect on the direction of TransMedics i.e., TransMedics and Adicet Bio go up and down completely randomly.

Pair Corralation between TransMedics and Adicet Bio

Given the investment horizon of 90 days TransMedics Group is expected to generate 0.82 times more return on investment than Adicet Bio. However, TransMedics Group is 1.22 times less risky than Adicet Bio. It trades about 0.23 of its potential returns per unit of risk. Adicet Bio is currently generating about -0.14 per unit of risk. If you would invest  8,236  in TransMedics Group on March 13, 2024 and sell it today you would earn a total of  6,231  from holding TransMedics Group or generate 75.66% return on investment over 90 days.

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

TransMedics Group  vs.  Adicet Bio

TransMedics Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TransMedics Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, TransMedics showed solid returns over the last few months and may actually be approaching a breakup point.

Adicet Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adicet Bio 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TransMedics and Adicet Bio

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

The idea behind TransMedics Group and Adicet Bio 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.