Correlation Between Precision BioSciences and Standard Biotools

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

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

Diversification Opportunities for Precision BioSciences and Standard Biotools

-0.32

Correlation Coefficient

Precision BioSciences  Standard Biotools

Very good diversification

The 3 months correlation between Precision and Standard is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and Standard Biotools in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Biotools 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 Standard Biotools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Biotools has no effect on the direction of Precision BioSciences i.e., Precision BioSciences and Standard Biotools go up and down completely randomly.

Pair Corralation between Precision BioSciences and Standard Biotools

Given the investment horizon of 90 days Precision BioSciences is expected to generate 1.1 times more return on investment than Standard Biotools. However, Precision BioSciences is 1.1 times more volatile than Standard Biotools. It trades about 0.05 of its potential returns per unit of risk. Standard Biotools is currently generating about -0.1 per unit of risk. If you would invest  426.00  in Precision BioSciences on December 30, 2024 and sell it today you would earn a total of  44.00  from holding Precision BioSciences or generate 10.33% return on investment over 90 days.

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

Precision BioSciences  vs.  Standard Biotools

Precision BioSciences

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Precision BioSciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Precision BioSciences disclosed solid returns over the last few months and may actually be approaching a breakup point.

Standard Biotools

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Biotools has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Precision BioSciences and Standard Biotools

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

The idea behind Precision BioSciences and Standard Biotools 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.