Correlation Between Lyell Immunopharma and Adagene

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

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

Diversification Opportunities for Lyell Immunopharma and Adagene

0.11

Correlation Coefficient

Lyell Immunopharma  Adagene

Average diversification

The 3 months correlation between Lyell and Adagene is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lyell Immunopharma and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Lyell Immunopharma 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 Lyell Immunopharma are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Lyell Immunopharma i.e., Lyell Immunopharma and Adagene go up and down completely randomly.

Pair Corralation between Lyell Immunopharma and Adagene

Given the investment horizon of 90 days Lyell Immunopharma is expected to under-perform the Adagene. In addition to that, Lyell Immunopharma is 1.17 times more volatile than Adagene. It trades about -0.17 of its total potential returns per unit of risk. Adagene is currently generating about 0.01 per unit of volatility. If you would invest  225.00  in Adagene on September 19, 2024 and sell it today you would lose (15.00) from holding Adagene or give up 6.67% of portfolio value over 90 days.

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

Lyell Immunopharma  vs.  Adagene

Lyell Immunopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lyell Immunopharma and Adagene

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

The idea behind Lyell Immunopharma and Adagene 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.