Correlation Between Ideaya Biosciences and Cogent Biosciences

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

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

Diversification Opportunities for Ideaya Biosciences and Cogent Biosciences

0.71

Correlation Coefficient

Ideaya Biosciences  Cogent Biosciences

Poor diversification

The 3 months correlation between Ideaya and Cogent is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ideaya Biosciences and Cogent Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Biosciences and Ideaya Biosciences 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 Ideaya Biosciences are associated (or correlated) with Cogent Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Biosciences has no effect on the direction of Ideaya Biosciences i.e., Ideaya Biosciences and Cogent Biosciences go up and down completely randomly.

Pair Corralation between Ideaya Biosciences and Cogent Biosciences

Given the investment horizon of 90 days Ideaya Biosciences is expected to under-perform the Cogent Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Ideaya Biosciences is 1.06 times less risky than Cogent Biosciences. The stock trades about -0.06 of its potential returns per unit of risk. The Cogent Biosciences is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  844.00  in Cogent Biosciences on September 25, 2024 and sell it today you would lose (58.00) from holding Cogent Biosciences or give up 6.87% of portfolio value over 90 days.

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

Ideaya Biosciences  vs.  Cogent Biosciences

Ideaya Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ideaya Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cogent Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogent Biosciences 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ideaya Biosciences and Cogent Biosciences

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

The idea behind Ideaya Biosciences and Cogent Biosciences 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.