Correlation Between Absci Corp and Fate Therapeutics

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

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

Diversification Opportunities for Absci Corp and Fate Therapeutics

0.53

Correlation Coefficient

Absci Corp  Fate Therapeutics

Very weak diversification

The 3 months correlation between Absci and Fate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Absci Corp and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and Absci Corp 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 Absci Corp are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Absci Corp i.e., Absci Corp and Fate Therapeutics go up and down completely randomly.

Pair Corralation between Absci Corp and Fate Therapeutics

Given the investment horizon of 90 days Absci Corp is expected to generate 1.02 times more return on investment than Fate Therapeutics. However, Absci Corp is 1.02 times more volatile than Fate Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Fate Therapeutics is currently generating about -0.13 per unit of risk. If you would invest  256.00  in Absci Corp on September 23, 2024 and sell it today you would earn a total of  43.00  from holding Absci Corp or generate 16.8% return on investment over 90 days.

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

Absci Corp  vs.  Fate Therapeutics

Absci Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absci Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate Therapeutics 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Absci Corp and Fate Therapeutics

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

The idea behind Absci Corp and Fate Therapeutics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.