Correlation Between Pliant Therapeutics and 89bio

Can any of the company-specific risk be diversified away by investing in both Pliant Therapeutics and 89bio 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 Pliant Therapeutics and 89bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pliant Therapeutics and 89bio Inc, you can compare the effects of market volatilities on Pliant Therapeutics and 89bio 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 Pliant Therapeutics with a short position of 89bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pliant Therapeutics and 89bio.

Diversification Opportunities for Pliant Therapeutics and 89bio

-0.42

Correlation Coefficient

Pliant Therapeutics  89bio

Very good diversification

The 3 months correlation between Pliant and 89bio is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pliant Therapeutics and 89bio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 89bio Inc and Pliant 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 Pliant Therapeutics are associated (or correlated) with 89bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 89bio Inc has no effect on the direction of Pliant Therapeutics i.e., Pliant Therapeutics and 89bio go up and down completely randomly.

Pair Corralation between Pliant Therapeutics and 89bio

Given the investment horizon of 90 days Pliant Therapeutics is expected to under-perform the 89bio. In addition to that, Pliant Therapeutics is 2.17 times more volatile than 89bio Inc. It trades about -0.17 of its total potential returns per unit of risk. 89bio Inc is currently generating about 0.04 per unit of volatility. If you would invest  779.00  in 89bio Inc on December 28, 2024 and sell it today you would earn a total of  23.00  from holding 89bio Inc or generate 2.95% return on investment over 90 days.

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

Pliant Therapeutics  vs.  89bio Inc

Pliant Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pliant Therapeutics 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.

89bio Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 89bio Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, 89bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pliant Therapeutics and 89bio

The main advantage of trading using opposite Pliant Therapeutics and 89bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pliant Therapeutics position performs unexpectedly, 89bio 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 89bio will offset losses from the drop in 89bio's long position.

The idea behind Pliant Therapeutics and 89bio Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.