Correlation Between Innovent Biologics and Lyell Immunopharma

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

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

Diversification Opportunities for Innovent Biologics and Lyell Immunopharma

0.15

Correlation Coefficient

Innovent Biologics  Lyell Immunopharma

Average diversification

The 3 months correlation between Innovent and Lyell is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Innovent Biologics and Lyell Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyell Immunopharma and Innovent Biologics 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 Innovent Biologics are associated (or correlated) with Lyell Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyell Immunopharma has no effect on the direction of Innovent Biologics i.e., Innovent Biologics and Lyell Immunopharma go up and down completely randomly.

Pair Corralation between Innovent Biologics and Lyell Immunopharma

Assuming the 90 days horizon Innovent Biologics is expected to generate 0.76 times more return on investment than Lyell Immunopharma. However, Innovent Biologics is 1.32 times less risky than Lyell Immunopharma. It trades about 0.1 of its potential returns per unit of risk. Lyell Immunopharma is currently generating about 0.01 per unit of risk. If you would invest  475.00  in Innovent Biologics on December 29, 2024 and sell it today you would earn a total of  115.00  from holding Innovent Biologics or generate 24.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Innovent Biologics  vs.  Lyell Immunopharma

Innovent Biologics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovent Biologics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Innovent Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

Lyell Immunopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Lyell Immunopharma is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Innovent Biologics and Lyell Immunopharma

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

The idea behind Innovent Biologics and Lyell Immunopharma 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.