Correlation Between Precision BioSciences and Cyclacel Pharmaceuticals

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

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

Diversification Opportunities for Precision BioSciences and Cyclacel Pharmaceuticals

0.21

Correlation Coefficient

Precision BioSciences  Cyclacel Pharmaceuticals

Modest diversification

The 3 months correlation between Precision and Cyclacel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals and Precision 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 Precision BioSciences are associated (or correlated) with Cyclacel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclacel Pharmaceuticals has no effect on the direction of Precision BioSciences i.e., Precision BioSciences and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Precision BioSciences and Cyclacel Pharmaceuticals

Given the investment horizon of 90 days Precision BioSciences is expected to generate 1.12 times more return on investment than Cyclacel Pharmaceuticals. However, Precision BioSciences is 1.12 times more volatile than Cyclacel Pharmaceuticals. It trades about -0.02 of its potential returns per unit of risk. Cyclacel Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  687.00  in Precision BioSciences on December 2, 2024 and sell it today you would lose (148.00) from holding Precision BioSciences or give up 21.54% of portfolio value over 90 days.

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

Precision BioSciences  vs.  Cyclacel Pharmaceuticals

Precision BioSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precision BioSciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental 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 Precision BioSciences and Cyclacel Pharmaceuticals

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

The idea behind Precision BioSciences and Cyclacel Pharmaceuticals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.