Correlation Between Connect Biopharma and Werewolf Therapeutics
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Werewolf 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 Connect Biopharma and Werewolf Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Werewolf Therapeutics, you can compare the effects of market volatilities on Connect Biopharma and Werewolf 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 Connect Biopharma with a short position of Werewolf Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Werewolf Therapeutics.
Diversification Opportunities for Connect Biopharma and Werewolf Therapeutics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Connect and Werewolf is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Werewolf Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werewolf Therapeutics and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with Werewolf Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werewolf Therapeutics has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Werewolf Therapeutics go up and down completely randomly.
Pair Corralation between Connect Biopharma and Werewolf Therapeutics
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the Werewolf Therapeutics. In addition to that, Connect Biopharma is 1.07 times more volatile than Werewolf Therapeutics. It trades about -0.22 of its total potential returns per unit of risk. Werewolf Therapeutics is currently generating about -0.13 per unit of volatility. If you would invest 148.00 in Werewolf Therapeutics on December 29, 2024 and sell it today you would lose (45.00) from holding Werewolf Therapeutics or give up 30.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Connect Biopharma Holdings vs. Werewolf Therapeutics
Performance |
Timeline |
Connect Biopharma |
Werewolf Therapeutics |
Connect Biopharma and Werewolf Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Connect Biopharma and Werewolf Therapeutics
The main advantage of trading using opposite Connect Biopharma and Werewolf Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Werewolf 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 Werewolf Therapeutics will offset losses from the drop in Werewolf Therapeutics' long position.Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
Werewolf Therapeutics vs. Monte Rosa Therapeutics | Werewolf Therapeutics vs. Design Therapeutics | Werewolf Therapeutics vs. Ikena Oncology | Werewolf Therapeutics vs. Stoke Therapeutics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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