Correlation Between Equillium and Avid Bioservices

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

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

Diversification Opportunities for Equillium and Avid Bioservices

0.4

Correlation Coefficient

Equillium  Avid Bioservices

Very weak diversification

The 3 months correlation between Equillium and Avid is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Avid Bioservices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avid Bioservices and Equillium 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 Equillium are associated (or correlated) with Avid Bioservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avid Bioservices has no effect on the direction of Equillium i.e., Equillium and Avid Bioservices go up and down completely randomly.

Pair Corralation between Equillium and Avid Bioservices

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Avid Bioservices. In addition to that, Equillium is 42.04 times more volatile than Avid Bioservices. It trades about -0.05 of its total potential returns per unit of risk. Avid Bioservices is currently generating about 0.28 per unit of volatility. If you would invest  1,233  in Avid Bioservices on December 28, 2024 and sell it today you would earn a total of  16.00  from holding Avid Bioservices or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	41.67%
Values	Daily Returns

Equillium  vs.  Avid Bioservices

Equillium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Avid Bioservices

Risk-Adjusted Performance

Solid

Over the last 90 days Avid Bioservices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Avid Bioservices is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Equillium and Avid Bioservices

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

The idea behind Equillium and Avid Bioservices 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.