Correlation Between NuCana PLC and Rallybio Corp

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

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

Diversification Opportunities for NuCana PLC and Rallybio Corp

0.77

Correlation Coefficient

NuCana PLC  Rallybio Corp

Poor diversification

The 3 months correlation between NuCana and Rallybio is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NuCana PLC and Rallybio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rallybio Corp and NuCana PLC 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 NuCana PLC are associated (or correlated) with Rallybio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rallybio Corp has no effect on the direction of NuCana PLC i.e., NuCana PLC and Rallybio Corp go up and down completely randomly.

Pair Corralation between NuCana PLC and Rallybio Corp

Given the investment horizon of 90 days NuCana PLC is expected to generate 1.47 times more return on investment than Rallybio Corp. However, NuCana PLC is 1.47 times more volatile than Rallybio Corp. It trades about 0.01 of its potential returns per unit of risk. Rallybio Corp is currently generating about -0.08 per unit of risk. If you would invest  141.00  in NuCana PLC on December 29, 2024 and sell it today you would lose (13.00) from holding NuCana PLC or give up 9.22% of portfolio value over 90 days.

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

NuCana PLC  vs.  Rallybio Corp

NuCana PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NuCana PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NuCana PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rallybio Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NuCana PLC and Rallybio Corp

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

The idea behind NuCana PLC and Rallybio Corp 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 CEOs Directory module to screen CEOs from public companies around the world.