Correlation Between Gracell Biotechnologies and Werewolf Therapeutics

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

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

Diversification Opportunities for Gracell Biotechnologies and Werewolf Therapeutics

0.37

Correlation Coefficient

Gracell Biotechnologies  Werewolf Therapeutics

Weak diversification

The 3 months correlation between Gracell and Werewolf is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gracell Biotechnologies and Werewolf Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werewolf Therapeutics and Gracell Biotechnologies 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 Gracell Biotechnologies are associated (or correlated) with Werewolf Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werewolf Therapeutics has no effect on the direction of Gracell Biotechnologies i.e., Gracell Biotechnologies and Werewolf Therapeutics go up and down completely randomly.

Pair Corralation between Gracell Biotechnologies and Werewolf Therapeutics

If you would invest  205.00  in Werewolf Therapeutics on September 2, 2024 and sell it today you would lose (5.00) from holding Werewolf Therapeutics or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Gracell Biotechnologies  vs.  Werewolf Therapeutics

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Werewolf Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werewolf Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Werewolf Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gracell Biotechnologies and Werewolf Therapeutics

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

The idea behind Gracell Biotechnologies and Werewolf Therapeutics 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.