Correlation Between Adaptimmune Therapeutics and ADMA Biologics

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

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

Diversification Opportunities for Adaptimmune Therapeutics and ADMA Biologics

-0.3

Correlation Coefficient

Adaptimmune Therapeutics  ADMA Biologics

Very good diversification

The 3 months correlation between Adaptimmune and ADMA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Adaptimmune Therapeutics Plc and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and Adaptimmune Therapeutics 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 Adaptimmune Therapeutics Plc are associated (or correlated) with ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Adaptimmune Therapeutics i.e., Adaptimmune Therapeutics and ADMA Biologics go up and down completely randomly.

Pair Corralation between Adaptimmune Therapeutics and ADMA Biologics

Given the investment horizon of 90 days Adaptimmune Therapeutics Plc is expected to under-perform the ADMA Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Adaptimmune Therapeutics Plc is 1.04 times less risky than ADMA Biologics. The stock trades about -0.13 of its potential returns per unit of risk. The ADMA Biologics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,674  in ADMA Biologics on September 5, 2024 and sell it today you would earn a total of  318.00  from holding ADMA Biologics or generate 19.0% return on investment over 90 days.

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

Adaptimmune Therapeutics Plc  vs.  ADMA Biologics

Adaptimmune Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptimmune Therapeutics Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ADMA Biologics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADMA Biologics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, ADMA Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adaptimmune Therapeutics and ADMA Biologics

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

The idea behind Adaptimmune Therapeutics Plc and ADMA Biologics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.