Correlation Between Cue Biopharma and Equillium

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

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

Diversification Opportunities for Cue Biopharma and Equillium

0.52

Correlation Coefficient

Cue Biopharma  Equillium

Very weak diversification

The 3 months correlation between Cue and Equillium is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cue Biopharma and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Cue Biopharma 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 Cue Biopharma are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Cue Biopharma i.e., Cue Biopharma and Equillium go up and down completely randomly.

Pair Corralation between Cue Biopharma and Equillium

Considering the 90-day investment horizon Cue Biopharma is expected to under-perform the Equillium. In addition to that, Cue Biopharma is 1.49 times more volatile than Equillium. It trades about -0.02 of its total potential returns per unit of risk. Equillium is currently generating about 0.04 per unit of volatility. If you would invest  75.00  in Equillium on October 7, 2024 and sell it today you would earn a total of  3.00  from holding Equillium or generate 4.0% return on investment over 90 days.

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

Cue Biopharma  vs.  Equillium

Cue Biopharma

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cue Biopharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cue Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cue Biopharma and Equillium

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

The idea behind Cue Biopharma and Equillium 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.