Correlation Between Equillium and Zymeworks Common

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

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

Diversification Opportunities for Equillium and Zymeworks Common

0.18

Correlation Coefficient

Equillium  Zymeworks Common

Average diversification

The 3 months correlation between Equillium and Zymeworks is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Zymeworks Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zymeworks Common Stock 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 Zymeworks Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zymeworks Common Stock has no effect on the direction of Equillium i.e., Equillium and Zymeworks Common go up and down completely randomly.

Pair Corralation between Equillium and Zymeworks Common

Allowing for the 90-day total investment horizon Equillium is expected to generate 2.61 times more return on investment than Zymeworks Common. However, Equillium is 2.61 times more volatile than Zymeworks Common Stock. It trades about 0.13 of its potential returns per unit of risk. Zymeworks Common Stock is currently generating about -0.1 per unit of risk. If you would invest  64.00  in Equillium on December 2, 2024 and sell it today you would earn a total of  12.00  from holding Equillium or generate 18.75% return on investment over 90 days.

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

Equillium  vs.  Zymeworks Common Stock

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.

Zymeworks Common Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zymeworks Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Zymeworks Common is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Equillium and Zymeworks Common

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

The idea behind Equillium and Zymeworks Common Stock 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.