Correlation Between Equillium and Rani Therapeutics

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

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

Diversification Opportunities for Equillium and Rani Therapeutics

0.41

Correlation Coefficient

Equillium  Rani Therapeutics

Very weak diversification

The 3 months correlation between Equillium and Rani is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Rani Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rani Therapeutics 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 Rani Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rani Therapeutics has no effect on the direction of Equillium i.e., Equillium and Rani Therapeutics go up and down completely randomly.

Pair Corralation between Equillium and Rani Therapeutics

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.45 times less return on investment than Rani Therapeutics. In addition to that, Equillium is 1.23 times more volatile than Rani Therapeutics Holdings. It trades about 0.03 of its total potential returns per unit of risk. Rani Therapeutics Holdings is currently generating about 0.05 per unit of volatility. If you would invest  146.00  in Rani Therapeutics Holdings on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Rani Therapeutics Holdings or generate 4.79% return on investment over 90 days.

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

Equillium  vs.  Rani Therapeutics Holdings

Equillium

Risk-Adjusted Performance

Insignificant

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

Rani Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rani Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Equillium and Rani Therapeutics

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

The idea behind Equillium and Rani Therapeutics Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.