Correlation Between Bicycle Therapeutics and Pmv Pharmaceuticals

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

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

Diversification Opportunities for Bicycle Therapeutics and Pmv Pharmaceuticals

-0.21

Correlation Coefficient

Bicycle Therapeutics  Pmv Pharmaceuticals

Very good diversification

The 3 months correlation between Bicycle and Pmv is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and Pmv Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pmv Pharmaceuticals 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 Pmv Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pmv Pharmaceuticals has no effect on the direction of Bicycle Therapeutics i.e., Bicycle Therapeutics and Pmv Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bicycle Therapeutics and Pmv Pharmaceuticals

Given the investment horizon of 90 days Bicycle Therapeutics is expected to generate 1.17 times more return on investment than Pmv Pharmaceuticals. However, Bicycle Therapeutics is 1.17 times more volatile than Pmv Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Pmv Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  1,363  in Bicycle Therapeutics on September 15, 2024 and sell it today you would earn a total of  18.00  from holding Bicycle Therapeutics or generate 1.32% return on investment over 90 days.

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

Bicycle Therapeutics  vs.  Pmv Pharmaceuticals

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pmv Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pmv Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Pmv Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bicycle Therapeutics and Pmv Pharmaceuticals

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

The idea behind Bicycle Therapeutics and Pmv Pharmaceuticals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.