Correlation Between Cue Biopharma and PolyPid

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

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

Diversification Opportunities for Cue Biopharma and PolyPid

0.16

Correlation Coefficient

Cue Biopharma  PolyPid

Average diversification

The 3 months correlation between Cue and PolyPid is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cue Biopharma and PolyPid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PolyPid 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 PolyPid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PolyPid has no effect on the direction of Cue Biopharma i.e., Cue Biopharma and PolyPid go up and down completely randomly.

Pair Corralation between Cue Biopharma and PolyPid

Considering the 90-day investment horizon Cue Biopharma is expected to generate 1.82 times more return on investment than PolyPid. However, Cue Biopharma is 1.82 times more volatile than PolyPid. It trades about 0.01 of its potential returns per unit of risk. PolyPid is currently generating about -0.04 per unit of risk. If you would invest  102.00  in Cue Biopharma on December 28, 2024 and sell it today you would lose (10.00) from holding Cue Biopharma or give up 9.8% of portfolio value over 90 days.

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

Cue Biopharma  vs.  PolyPid

Cue Biopharma

Risk-Adjusted Performance

Weak

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

PolyPid

Risk-Adjusted Performance

Very Weak

Over the last 90 days PolyPid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cue Biopharma and PolyPid

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

The idea behind Cue Biopharma and PolyPid 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.