Correlation Between Iovance Biotherapeutics and Cyclo Therapeutics

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

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

Diversification Opportunities for Iovance Biotherapeutics and Cyclo Therapeutics

0.74

Correlation Coefficient

Iovance Biotherapeutics  Cyclo Therapeutics

Poor diversification

The 3 months correlation between Iovance and Cyclo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Cyclo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclo Therapeutics and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with Cyclo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclo Therapeutics has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Cyclo Therapeutics go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and Cyclo Therapeutics

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to generate 0.86 times more return on investment than Cyclo Therapeutics. However, Iovance Biotherapeutics is 1.16 times less risky than Cyclo Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Cyclo Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  703.00  in Iovance Biotherapeutics on October 10, 2024 and sell it today you would earn a total of  37.00  from holding Iovance Biotherapeutics or generate 5.26% return on investment over 90 days.

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

Iovance Biotherapeutics  vs.  Cyclo Therapeutics

Iovance Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cyclo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Iovance Biotherapeutics and Cyclo Therapeutics

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

The idea behind Iovance Biotherapeutics and Cyclo 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.