Correlation Between Immunocore Holdings and Edgewise Therapeutics

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

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

Diversification Opportunities for Immunocore Holdings and Edgewise Therapeutics

0.61

Correlation Coefficient

Immunocore Holdings  Edgewise Therapeutics

Poor diversification

The 3 months correlation between Immunocore and Edgewise is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Immunocore Holdings and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics and Immunocore Holdings 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 Immunocore Holdings are associated (or correlated) with Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of Immunocore Holdings i.e., Immunocore Holdings and Edgewise Therapeutics go up and down completely randomly.

Pair Corralation between Immunocore Holdings and Edgewise Therapeutics

Given the investment horizon of 90 days Immunocore Holdings is expected to under-perform the Edgewise Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Immunocore Holdings is 1.74 times less risky than Edgewise Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Edgewise Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,669  in Edgewise Therapeutics on September 28, 2024 and sell it today you would earn a total of  297.00  from holding Edgewise Therapeutics or generate 11.13% return on investment over 90 days.

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

Immunocore Holdings  vs.  Edgewise Therapeutics

Immunocore Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immunocore Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Edgewise Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewise Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Edgewise Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Immunocore Holdings and Edgewise Therapeutics

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

The idea behind Immunocore Holdings and Edgewise 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.