Correlation Between Adaptimmune Therapeutics and Icosavax

Can any of the company-specific risk be diversified away by investing in both Adaptimmune Therapeutics and Icosavax 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 Icosavax 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 Icosavax, you can compare the effects of market volatilities on Adaptimmune Therapeutics and Icosavax 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 Icosavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaptimmune Therapeutics and Icosavax.

Diversification Opportunities for Adaptimmune Therapeutics and Icosavax

-0.81

Correlation Coefficient

Adaptimmune Therapeutics  Icosavax

Pay attention - limited upside

The 3 months correlation between Adaptimmune and Icosavax is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Adaptimmune Therapeutics Plc and Icosavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icosavax 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 Icosavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icosavax has no effect on the direction of Adaptimmune Therapeutics i.e., Adaptimmune Therapeutics and Icosavax go up and down completely randomly.

Pair Corralation between Adaptimmune Therapeutics and Icosavax

Given the investment horizon of 90 days Adaptimmune Therapeutics Plc is expected to under-perform the Icosavax. But the stock apears to be less risky and, when comparing its historical volatility, Adaptimmune Therapeutics Plc is 1.16 times less risky than Icosavax. The stock trades about -0.01 of its potential returns per unit of risk. The Icosavax is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  850.00  in Icosavax on August 31, 2024 and sell it today you would earn a total of  52.00  from holding Icosavax or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	28.51%
Values	Daily Returns

Adaptimmune Therapeutics Plc  vs.  Icosavax

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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Icosavax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icosavax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Icosavax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adaptimmune Therapeutics and Icosavax

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

The idea behind Adaptimmune Therapeutics Plc and Icosavax 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.