Correlation Between Inhibrx and Hoth Therapeutics

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

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

Diversification Opportunities for Inhibrx and Hoth Therapeutics

0.59

Correlation Coefficient

Inhibrx  Hoth Therapeutics

Very weak diversification

The 3 months correlation between Inhibrx and Hoth is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Inhibrx and Hoth Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoth Therapeutics and Inhibrx 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 Inhibrx are associated (or correlated) with Hoth Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoth Therapeutics has no effect on the direction of Inhibrx i.e., Inhibrx and Hoth Therapeutics go up and down completely randomly.

Pair Corralation between Inhibrx and Hoth Therapeutics

Given the investment horizon of 90 days Inhibrx is expected to generate 0.64 times more return on investment than Hoth Therapeutics. However, Inhibrx is 1.56 times less risky than Hoth Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Hoth Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  2,526  in Inhibrx on September 26, 2024 and sell it today you would lose (1,077) from holding Inhibrx or give up 42.64% of portfolio value over 90 days.

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

Inhibrx  vs.  Hoth Therapeutics

Inhibrx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inhibrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Inhibrx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hoth Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoth Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hoth Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Inhibrx and Hoth Therapeutics

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

The idea behind Inhibrx and Hoth 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.