Correlation Between Bicycle Therapeutics and Nautilus Biotechnology

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

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

Diversification Opportunities for Bicycle Therapeutics and Nautilus Biotechnology

0.72

Correlation Coefficient

Bicycle Therapeutics  Nautilus Biotechnology

Poor diversification

The 3 months correlation between Bicycle and Nautilus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and Nautilus Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nautilus Biotechnology and Bicycle 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 Bicycle Therapeutics are associated (or correlated) with Nautilus Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nautilus Biotechnology has no effect on the direction of Bicycle Therapeutics i.e., Bicycle Therapeutics and Nautilus Biotechnology go up and down completely randomly.

Pair Corralation between Bicycle Therapeutics and Nautilus Biotechnology

Given the investment horizon of 90 days Bicycle Therapeutics is expected to generate 1.13 times more return on investment than Nautilus Biotechnology. However, Bicycle Therapeutics is 1.13 times more volatile than Nautilus Biotechnology. It trades about 0.0 of its potential returns per unit of risk. Nautilus Biotechnology is currently generating about -0.03 per unit of risk. If you would invest  2,150  in Bicycle Therapeutics on August 30, 2024 and sell it today you would lose (115.00) from holding Bicycle Therapeutics or give up 5.35% of portfolio value over 90 days.

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

Bicycle Therapeutics  vs.  Nautilus Biotechnology

Bicycle Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bicycle Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bicycle Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nautilus Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nautilus Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bicycle Therapeutics and Nautilus Biotechnology

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

The idea behind Bicycle Therapeutics and Nautilus Biotechnology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.