Correlation Between Immunitybio and Terns Pharmaceuticals

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

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

Diversification Opportunities for Immunitybio and Terns Pharmaceuticals

-0.26

Correlation Coefficient

Immunitybio  Terns Pharmaceuticals

Very good diversification

The 3 months correlation between Immunitybio and Terns is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Immunitybio and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals and Immunitybio 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 Immunitybio are associated (or correlated) with Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Immunitybio i.e., Immunitybio and Terns Pharmaceuticals go up and down completely randomly.

Pair Corralation between Immunitybio and Terns Pharmaceuticals

Given the investment horizon of 90 days Immunitybio is expected to generate 1.8 times more return on investment than Terns Pharmaceuticals. However, Immunitybio is 1.8 times more volatile than Terns Pharmaceuticals. It trades about 0.07 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.25 per unit of risk. If you would invest  268.00  in Immunitybio on December 30, 2024 and sell it today you would earn a total of  46.00  from holding Immunitybio or generate 17.16% return on investment over 90 days.

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

Immunitybio  vs.  Terns Pharmaceuticals

Immunitybio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Immunitybio are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Immunitybio showed solid returns over the last few months and may actually be approaching a breakup point.

Terns Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terns Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Immunitybio and Terns Pharmaceuticals

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

The idea behind Immunitybio and Terns Pharmaceuticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.