Correlation Between Neoleukin Therapeutics and Galera Therapeutics

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

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

Diversification Opportunities for Neoleukin Therapeutics and Galera Therapeutics

0.2

Correlation Coefficient

Neoleukin Therapeutics  Galera Therapeutics

Modest diversification

The 3 months correlation between Neoleukin and Galera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Neoleukin Therapeutics and Galera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galera Therapeutics and Neoleukin Therapeutics 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 Neoleukin Therapeutics are associated (or correlated) with Galera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galera Therapeutics has no effect on the direction of Neoleukin Therapeutics i.e., Neoleukin Therapeutics and Galera Therapeutics go up and down completely randomly.

Pair Corralation between Neoleukin Therapeutics and Galera Therapeutics

Given the investment horizon of 90 days Neoleukin Therapeutics is expected to generate 1.18 times less return on investment than Galera Therapeutics. But when comparing it to its historical volatility, Neoleukin Therapeutics is 1.02 times less risky than Galera Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Galera Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Galera Therapeutics on October 3, 2024 and sell it today you would earn a total of  73.00  from holding Galera Therapeutics or generate 39.46% return on investment over 90 days.

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

Neoleukin Therapeutics  vs.  Galera Therapeutics

Neoleukin Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Galera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galera Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Galera Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neoleukin Therapeutics and Galera Therapeutics

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

The idea behind Neoleukin Therapeutics and Galera 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.