Correlation Between Vaccinex and Equillium

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

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

Diversification Opportunities for Vaccinex and Equillium

0.01

Correlation Coefficient

Vaccinex  Equillium

Significant diversification

The 3 months correlation between Vaccinex and Equillium is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vaccinex and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Vaccinex 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 Vaccinex are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Vaccinex i.e., Vaccinex and Equillium go up and down completely randomly.

Pair Corralation between Vaccinex and Equillium

Given the investment horizon of 90 days Vaccinex is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Vaccinex is 1.14 times less risky than Equillium. The stock trades about -0.37 of its potential returns per unit of risk. The Equillium is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Equillium on January 26, 2024 and sell it today you would lose (27.00) from holding Equillium or give up 13.11% of portfolio value over 90 days.

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

Vaccinex  vs.  Equillium

Vaccinex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaccinex 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 fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Equillium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaccinex and Equillium

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

The idea behind Vaccinex and Equillium 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.