Correlation Between BeyondSpring and RAPT Therapeutics

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

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

Diversification Opportunities for BeyondSpring and RAPT Therapeutics

0.04

Correlation Coefficient

BeyondSpring  RAPT Therapeutics

Significant diversification

The 3 months correlation between BeyondSpring and RAPT is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BeyondSpring and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and BeyondSpring 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 BeyondSpring are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of BeyondSpring i.e., BeyondSpring and RAPT Therapeutics go up and down completely randomly.

Pair Corralation between BeyondSpring and RAPT Therapeutics

Given the investment horizon of 90 days BeyondSpring is expected to generate 10.86 times less return on investment than RAPT Therapeutics. But when comparing it to its historical volatility, BeyondSpring is 4.2 times less risky than RAPT Therapeutics. It trades about 0.02 of its potential returns per unit of risk. RAPT Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  116.00  in RAPT Therapeutics on December 2, 2024 and sell it today you would lose (2.00) from holding RAPT Therapeutics or give up 1.72% of portfolio value over 90 days.

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

BeyondSpring  vs.  RAPT Therapeutics

BeyondSpring

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BeyondSpring are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BeyondSpring is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

RAPT Therapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RAPT Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RAPT Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeyondSpring and RAPT Therapeutics

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

The idea behind BeyondSpring and RAPT Therapeutics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.