Correlation Between Caribou Biosciences and G1 Therapeutics

Can any of the company-specific risk be diversified away by investing in both Caribou Biosciences and G1 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 Caribou Biosciences and G1 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caribou Biosciences and G1 Therapeutics, you can compare the effects of market volatilities on Caribou Biosciences and G1 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 Caribou Biosciences with a short position of G1 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribou Biosciences and G1 Therapeutics.

Diversification Opportunities for Caribou Biosciences and G1 Therapeutics

0.36

Correlation Coefficient

Caribou Biosciences  G1 Therapeutics

Weak diversification

The 3 months correlation between Caribou and GTHX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and G1 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G1 Therapeutics 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 G1 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G1 Therapeutics has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and G1 Therapeutics go up and down completely randomly.

Pair Corralation between Caribou Biosciences and G1 Therapeutics

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the G1 Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 1.36 times less risky than G1 Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The G1 Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  543.00  in G1 Therapeutics on September 20, 2024 and sell it today you would earn a total of  172.00  from holding G1 Therapeutics or generate 31.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.07%
Values	Daily Returns

Caribou Biosciences  vs.  G1 Therapeutics

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 latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

G1 Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G1 Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, G1 Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caribou Biosciences and G1 Therapeutics

The main advantage of trading using opposite Caribou Biosciences and G1 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences position performs unexpectedly, G1 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 G1 Therapeutics will offset losses from the drop in G1 Therapeutics' long position.

The idea behind Caribou Biosciences and G1 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.