Correlation Between Crispr Therapeutics and Beam Therapeutics

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

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

Diversification Opportunities for Crispr Therapeutics and Beam Therapeutics

0.58

Correlation Coefficient

Crispr Therapeutics  Beam Therapeutics

Very weak diversification

The 3 months correlation between Crispr and Beam is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Crispr Therapeutics AG and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics and Crispr Therapeutics 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 Crispr Therapeutics AG are associated (or correlated) with Beam Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Therapeutics has no effect on the direction of Crispr Therapeutics i.e., Crispr Therapeutics and Beam Therapeutics go up and down completely randomly.

Pair Corralation between Crispr Therapeutics and Beam Therapeutics

Given the investment horizon of 90 days Crispr Therapeutics AG is expected to generate 0.68 times more return on investment than Beam Therapeutics. However, Crispr Therapeutics AG is 1.48 times less risky than Beam Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Beam Therapeutics is currently generating about 0.03 per unit of risk. If you would invest  4,772  in Crispr Therapeutics AG on August 30, 2024 and sell it today you would earn a total of  312.00  from holding Crispr Therapeutics AG or generate 6.54% return on investment over 90 days.

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

Crispr Therapeutics AG  vs.  Beam Therapeutics

Crispr Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crispr Therapeutics AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Crispr Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Beam Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Crispr Therapeutics and Beam Therapeutics

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

The idea behind Crispr Therapeutics AG and Beam 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.