Correlation Between Arcus Biosciences and Monte Rosa

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

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

Diversification Opportunities for Arcus Biosciences and Monte Rosa

-0.21

Correlation Coefficient

Arcus Biosciences  Monte Rosa

Very good diversification

The 3 months correlation between Arcus and Monte is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Monte Rosa Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monte Rosa Therapeutics and Arcus Biosciences 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 Arcus Biosciences are associated (or correlated) with Monte Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monte Rosa Therapeutics has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Monte Rosa go up and down completely randomly.

Pair Corralation between Arcus Biosciences and Monte Rosa

Given the investment horizon of 90 days Arcus Biosciences is expected to generate 16.5 times less return on investment than Monte Rosa. But when comparing it to its historical volatility, Arcus Biosciences is 2.75 times less risky than Monte Rosa. It trades about 0.01 of its potential returns per unit of risk. Monte Rosa Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Monte Rosa Therapeutics on September 23, 2024 and sell it today you would earn a total of  314.00  from holding Monte Rosa Therapeutics or generate 82.85% return on investment over 90 days.

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

Arcus Biosciences  vs.  Monte Rosa Therapeutics

Arcus Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcus Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arcus Biosciences is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Monte Rosa Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monte Rosa Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Monte Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcus Biosciences and Monte Rosa

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

The idea behind Arcus Biosciences and Monte Rosa 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.