Correlation Between Caribou Biosciences and ATyr Pharma

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

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

Diversification Opportunities for Caribou Biosciences and ATyr Pharma

-0.06

Correlation Coefficient

Caribou Biosciences  ATyr Pharma

Good diversification

The 3 months correlation between Caribou and ATyr is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and ATyr Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATyr Pharma 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 ATyr Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATyr Pharma has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and ATyr Pharma go up and down completely randomly.

Pair Corralation between Caribou Biosciences and ATyr Pharma

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 0.88 times more return on investment than ATyr Pharma. However, Caribou Biosciences is 1.14 times less risky than ATyr Pharma. It trades about -0.02 of its potential returns per unit of risk. ATyr Pharma is currently generating about -0.04 per unit of risk. If you would invest  628.00  in Caribou Biosciences on September 20, 2024 and sell it today you would lose (450.00) from holding Caribou Biosciences or give up 71.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Caribou Biosciences  vs.  ATyr Pharma

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.

ATyr Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATyr Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ATyr Pharma is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Caribou Biosciences and ATyr Pharma

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

The idea behind Caribou Biosciences and ATyr Pharma 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.