Correlation Between Lineage Cell and Bolt Biotherapeutics

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

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

Diversification Opportunities for Lineage Cell and Bolt Biotherapeutics

0.3

Correlation Coefficient

Lineage Cell  Bolt Biotherapeutics

Weak diversification

The 3 months correlation between Lineage and Bolt is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Lineage Cell 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 Lineage Cell Therapeutics are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Lineage Cell i.e., Lineage Cell and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between Lineage Cell and Bolt Biotherapeutics

Given the investment horizon of 90 days Lineage Cell Therapeutics is expected to under-perform the Bolt Biotherapeutics. In addition to that, Lineage Cell is 2.23 times more volatile than Bolt Biotherapeutics. It trades about -0.09 of its total potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.02 per unit of volatility. If you would invest  68.00  in Bolt Biotherapeutics on September 3, 2024 and sell it today you would lose (4.00) from holding Bolt Biotherapeutics or give up 5.88% of portfolio value over 90 days.

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

Lineage Cell Therapeutics  vs.  Bolt Biotherapeutics

Lineage Cell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage Cell Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Bolt Biotherapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lineage Cell and Bolt Biotherapeutics

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

The idea behind Lineage Cell Therapeutics and Bolt Biotherapeutics 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.