Correlation Between Freeline Therapeutics and VectivBio Holding

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

By analyzing existing cross correlation between Freeline Therapeutics Holdings and VectivBio Holding AG, you can compare the effects of market volatilities on Freeline Therapeutics and VectivBio Holding 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 Freeline Therapeutics with a short position of VectivBio Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeline Therapeutics and VectivBio Holding.

Diversification Opportunities for Freeline Therapeutics and VectivBio Holding

-0.42

Correlation Coefficient

Freeline Therapeutics  VectivBio Holding

Very good diversification

The 3 months correlation between Freeline and VectivBio is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Freeline Therapeutics Holdings and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding and Freeline Therapeutics 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 Freeline Therapeutics Holdings are associated (or correlated) with VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Freeline Therapeutics i.e., Freeline Therapeutics and VectivBio Holding go up and down completely randomly.

Pair Corralation between Freeline Therapeutics and VectivBio Holding

Given the investment horizon of 90 days Freeline Therapeutics Holdings is expected to under-perform the VectivBio Holding. In addition to that, Freeline Therapeutics is 1.99 times more volatile than VectivBio Holding AG. It trades about -0.02 of its total potential returns per unit of risk. VectivBio Holding AG is currently generating about 0.13 per unit of volatility. If you would invest  863.00  in VectivBio Holding AG on September 4, 2024 and sell it today you would earn a total of  822.00  from holding VectivBio Holding AG or generate 95.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.08%
Values	Daily Returns

Freeline Therapeutics Holdings  vs.  VectivBio Holding AG

Freeline Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

VectivBio Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VectivBio Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, VectivBio Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Freeline Therapeutics and VectivBio Holding

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

The idea behind Freeline Therapeutics Holdings and VectivBio Holding AG 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..