Correlation Between ClearOne and Passage Bio

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

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

Diversification Opportunities for ClearOne and Passage Bio

-0.07

Correlation Coefficient

ClearOne  Passage Bio

Good diversification

The 3 months correlation between ClearOne and Passage is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and ClearOne 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 ClearOne are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of ClearOne i.e., ClearOne and Passage Bio go up and down completely randomly.

Pair Corralation between ClearOne and Passage Bio

Given the investment horizon of 90 days ClearOne is expected to generate 1.26 times more return on investment than Passage Bio. However, ClearOne is 1.26 times more volatile than Passage Bio. It trades about 0.03 of its potential returns per unit of risk. Passage Bio is currently generating about 0.01 per unit of risk. If you would invest  43.00  in ClearOne on September 19, 2024 and sell it today you would earn a total of  10.00  from holding ClearOne or generate 23.26% return on investment over 90 days.

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

ClearOne  vs.  Passage Bio

ClearOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Passage Bio

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with ClearOne and Passage Bio

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

The idea behind ClearOne and Passage Bio 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.