Correlation Between Bolt Biotherapeutics and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Bolt Biotherapeutics and Acumen Pharmaceuticals

0.79

Correlation Coefficient

Bolt Biotherapeutics  Acumen Pharmaceuticals

Poor diversification

The 3 months correlation between Bolt and Acumen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bolt Biotherapeutics and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Bolt Biotherapeutics 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 Bolt Biotherapeutics are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Bolt Biotherapeutics i.e., Bolt Biotherapeutics and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bolt Biotherapeutics and Acumen Pharmaceuticals

Given the investment horizon of 90 days Bolt Biotherapeutics is expected to under-perform the Acumen Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Bolt Biotherapeutics is 1.18 times less risky than Acumen Pharmaceuticals. The stock trades about -0.05 of its potential returns per unit of risk. The Acumen Pharmaceuticals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Acumen Pharmaceuticals on October 7, 2024 and sell it today you would lose (140.00) from holding Acumen Pharmaceuticals or give up 42.42% of portfolio value over 90 days.

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

Bolt Biotherapeutics  vs.  Acumen Pharmaceuticals

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acumen Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bolt Biotherapeutics and Acumen Pharmaceuticals

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

The idea behind Bolt Biotherapeutics and Acumen 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.