Correlation Between Crinetics Pharmaceuticals and Adagene

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

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

Diversification Opportunities for Crinetics Pharmaceuticals and Adagene

0.43

Correlation Coefficient

Crinetics Pharmaceuticals  Adagene

Very weak diversification

The 3 months correlation between Crinetics and Adagene is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Crinetics Pharmaceuticals and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals i.e., Crinetics Pharmaceuticals and Adagene go up and down completely randomly.

Pair Corralation between Crinetics Pharmaceuticals and Adagene

Given the investment horizon of 90 days Crinetics Pharmaceuticals is expected to generate 0.43 times more return on investment than Adagene. However, Crinetics Pharmaceuticals is 2.32 times less risky than Adagene. It trades about 0.07 of its potential returns per unit of risk. Adagene is currently generating about -0.02 per unit of risk. If you would invest  4,558  in Crinetics Pharmaceuticals on September 19, 2024 and sell it today you would earn a total of  942.00  from holding Crinetics Pharmaceuticals or generate 20.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Crinetics Pharmaceuticals  vs.  Adagene

Crinetics Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Crinetics Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 Crinetics Pharmaceuticals and Adagene

The main advantage of trading using opposite Crinetics Pharmaceuticals and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.