Correlation Between Black Diamond and Arcellx

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

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

Diversification Opportunities for Black Diamond and Arcellx

0.74

Correlation Coefficient

Black Diamond  Arcellx

Poor diversification

The 3 months correlation between Black and Arcellx is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and Arcellx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcellx and Black Diamond 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 Black Diamond Therapeutics are associated (or correlated) with Arcellx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcellx has no effect on the direction of Black Diamond i.e., Black Diamond and Arcellx go up and down completely randomly.

Pair Corralation between Black Diamond and Arcellx

Given the investment horizon of 90 days Black Diamond Therapeutics is expected to generate 2.45 times more return on investment than Arcellx. However, Black Diamond is 2.45 times more volatile than Arcellx. It trades about 0.09 of its potential returns per unit of risk. Arcellx is currently generating about -0.41 per unit of risk. If you would invest  230.00  in Black Diamond Therapeutics on October 27, 2024 and sell it today you would earn a total of  18.00  from holding Black Diamond Therapeutics or generate 7.83% return on investment over 90 days.

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

Black Diamond Therapeutics  vs.  Arcellx

Black Diamond Therap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Arcellx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcellx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Black Diamond and Arcellx

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

The idea behind Black Diamond Therapeutics and Arcellx 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.