Correlation Between Adaptive Biotechnologies and Ocean Biomedical

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

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

Diversification Opportunities for Adaptive Biotechnologies and Ocean Biomedical

-0.86

Correlation Coefficient

Adaptive Biotechnologies  Ocean Biomedical

Pay attention - limited upside

The 3 months correlation between Adaptive and Ocean is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Adaptive Biotechnologies Corp and Ocean Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Biomedical and Adaptive Biotechnologies 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 Adaptive Biotechnologies Corp are associated (or correlated) with Ocean Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Biomedical has no effect on the direction of Adaptive Biotechnologies i.e., Adaptive Biotechnologies and Ocean Biomedical go up and down completely randomly.

Pair Corralation between Adaptive Biotechnologies and Ocean Biomedical

Given the investment horizon of 90 days Adaptive Biotechnologies Corp is expected to generate 0.52 times more return on investment than Ocean Biomedical. However, Adaptive Biotechnologies Corp is 1.92 times less risky than Ocean Biomedical. It trades about 0.14 of its potential returns per unit of risk. Ocean Biomedical is currently generating about -0.27 per unit of risk. If you would invest  594.00  in Adaptive Biotechnologies Corp on November 28, 2024 and sell it today you would earn a total of  242.00  from holding Adaptive Biotechnologies Corp or generate 40.74% return on investment over 90 days.

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

Adaptive Biotechnologies Corp  vs.  Ocean Biomedical

Adaptive Biotechnologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adaptive Biotechnologies Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Adaptive Biotechnologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ocean Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adaptive Biotechnologies and Ocean Biomedical

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

The idea behind Adaptive Biotechnologies Corp and Ocean Biomedical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.