Correlation Between Caribou Biosciences and Adagene

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

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

Diversification Opportunities for Caribou Biosciences and Adagene

0.38

Correlation Coefficient

Caribou Biosciences  Adagene

Weak diversification

The 3 months correlation between Caribou and Adagene is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Caribou Biosciences 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 Caribou Biosciences are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Adagene go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Adagene

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 1.36 times less return on investment than Adagene. But when comparing it to its historical volatility, Caribou Biosciences is 1.16 times less risky than Adagene. It trades about 0.0 of its potential returns per unit of risk. Adagene is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Adagene on September 24, 2024 and sell it today you would lose (18.00) from holding Adagene or give up 8.07% of portfolio value over 90 days.

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

Caribou Biosciences  vs.  Adagene

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caribou Biosciences and Adagene

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

The idea behind Caribou Biosciences and Adagene 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..