Correlation Between Assembly Biosciences and Equillium

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

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

Diversification Opportunities for Assembly Biosciences and Equillium

0.48

Correlation Coefficient

Assembly Biosciences  Equillium

Very weak diversification

The 3 months correlation between Assembly and Equillium is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Assembly Biosciences and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Assembly Biosciences 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 Assembly Biosciences 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 Assembly Biosciences i.e., Assembly Biosciences and Equillium go up and down completely randomly.

Pair Corralation between Assembly Biosciences and Equillium

Given the investment horizon of 90 days Assembly Biosciences is expected to generate 0.48 times more return on investment than Equillium. However, Assembly Biosciences is 2.07 times less risky than Equillium. It trades about 0.08 of its potential returns per unit of risk. Equillium is currently generating about 0.03 per unit of risk. If you would invest  971.00  in Assembly Biosciences on October 7, 2024 and sell it today you would earn a total of  778.00  from holding Assembly Biosciences or generate 80.12% return on investment over 90 days.

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

Assembly Biosciences  vs.  Equillium

Assembly Biosciences

Risk-Adjusted Performance

6 of 100

Modest

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

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Assembly Biosciences and Equillium

The main advantage of trading using opposite Assembly Biosciences and Equillium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assembly Biosciences 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 Assembly Biosciences 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.