Correlation Between Incyte and Equillium

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

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

Diversification Opportunities for Incyte and Equillium

-0.23

Correlation Coefficient

Incyte  Equillium

Very good diversification

The 3 months correlation between Incyte and Equillium is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Incyte 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 Incyte are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Incyte i.e., Incyte and Equillium go up and down completely randomly.

Pair Corralation between Incyte and Equillium

Given the investment horizon of 90 days Incyte is expected to generate 0.38 times more return on investment than Equillium. However, Incyte is 2.62 times less risky than Equillium. It trades about 0.08 of its potential returns per unit of risk. Equillium is currently generating about -0.11 per unit of risk. If you would invest  6,524  in Incyte on October 24, 2024 and sell it today you would earn a total of  722.50  from holding Incyte or generate 11.07% return on investment over 90 days.

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

Incyte  vs.  Equillium

Incyte

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Incyte are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Incyte showed solid returns over the last few months and may actually be approaching a breakup point.

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Incyte and Equillium

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

The idea behind Incyte and Equillium 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.