Correlation Between RAPT Therapeutics and BeyondSpring

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

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

Diversification Opportunities for RAPT Therapeutics and BeyondSpring

0.43

Correlation Coefficient

RAPT Therapeutics  BeyondSpring

Very weak diversification

The 3 months correlation between RAPT and BeyondSpring is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding RAPT Therapeutics and BeyondSpring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeyondSpring and RAPT 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 RAPT Therapeutics are associated (or correlated) with BeyondSpring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeyondSpring has no effect on the direction of RAPT Therapeutics i.e., RAPT Therapeutics and BeyondSpring go up and down completely randomly.

Pair Corralation between RAPT Therapeutics and BeyondSpring

Given the investment horizon of 90 days RAPT Therapeutics is expected to under-perform the BeyondSpring. But the stock apears to be less risky and, when comparing its historical volatility, RAPT Therapeutics is 1.13 times less risky than BeyondSpring. The stock trades about -0.04 of its potential returns per unit of risk. The BeyondSpring is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  115.00  in BeyondSpring on September 4, 2024 and sell it today you would earn a total of  54.00  from holding BeyondSpring or generate 46.96% return on investment over 90 days.

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

RAPT Therapeutics  vs.  BeyondSpring

RAPT Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAPT Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BeyondSpring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeyondSpring has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with RAPT Therapeutics and BeyondSpring

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

The idea behind RAPT Therapeutics and BeyondSpring 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.