Correlation Between RAPT Therapeutics and Fusion Pharmaceuticals

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

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

Diversification Opportunities for RAPT Therapeutics and Fusion Pharmaceuticals

-0.22

Correlation Coefficient

RAPT Therapeutics  Fusion Pharmaceuticals

Very good diversification

The 3 months correlation between RAPT and Fusion is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding RAPT Therapeutics and Fusion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Pharmaceuticals 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 Fusion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Pharmaceuticals has no effect on the direction of RAPT Therapeutics i.e., RAPT Therapeutics and Fusion Pharmaceuticals go up and down completely randomly.

Pair Corralation between RAPT Therapeutics and Fusion Pharmaceuticals

If you would invest  83.00  in RAPT Therapeutics on October 21, 2024 and sell it today you would earn a total of  37.00  from holding RAPT Therapeutics or generate 44.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

RAPT Therapeutics  vs.  Fusion Pharmaceuticals

RAPT Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RAPT Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RAPT Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fusion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fusion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fusion Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RAPT Therapeutics and Fusion Pharmaceuticals

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

The idea behind RAPT Therapeutics and Fusion 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.