Correlation Between Equillium and Virax Biolabs

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

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

Diversification Opportunities for Equillium and Virax Biolabs

0.21

Correlation Coefficient

Equillium  Virax Biolabs

Modest diversification

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

Pair Corralation between Equillium and Virax Biolabs

Allowing for the 90-day total investment horizon Equillium is expected to generate 4.74 times less return on investment than Virax Biolabs. But when comparing it to its historical volatility, Equillium is 1.96 times less risky than Virax Biolabs. It trades about 0.04 of its potential returns per unit of risk. Virax Biolabs Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Virax Biolabs Group on October 7, 2024 and sell it today you would earn a total of  53.00  from holding Virax Biolabs Group or generate 27.89% return on investment over 90 days.

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

Equillium  vs.  Virax Biolabs Group

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Virax Biolabs Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Virax Biolabs

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

The idea behind Equillium and Virax Biolabs Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.