Correlation Between Passage Bio and Crinetics Pharmaceuticals

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

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

Diversification Opportunities for Passage Bio and Crinetics Pharmaceuticals

0.77

Correlation Coefficient

Passage Bio  Crinetics Pharmaceuticals

Poor diversification

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

Pair Corralation between Passage Bio and Crinetics Pharmaceuticals

Given the investment horizon of 90 days Passage Bio is expected to under-perform the Crinetics Pharmaceuticals. In addition to that, Passage Bio is 2.17 times more volatile than Crinetics Pharmaceuticals. It trades about -0.08 of its total potential returns per unit of risk. Crinetics Pharmaceuticals is currently generating about -0.15 per unit of volatility. If you would invest  5,067  in Crinetics Pharmaceuticals on December 30, 2024 and sell it today you would lose (1,594) from holding Crinetics Pharmaceuticals or give up 31.46% of portfolio value over 90 days.

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

Passage Bio  vs.  Crinetics Pharmaceuticals

Passage Bio

Risk-Adjusted Performance

Very Weak

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

Crinetics Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crinetics Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly 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 Passage Bio and Crinetics Pharmaceuticals

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

The idea behind Passage Bio and Crinetics Pharmaceuticals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.