Correlation Between Replimune and Ventyx Biosciences

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

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

Diversification Opportunities for Replimune and Ventyx Biosciences

0.32

Correlation Coefficient

Replimune  Ventyx Biosciences

Weak diversification

The 3 months correlation between Replimune and Ventyx is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Replimune Group and Ventyx Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventyx Biosciences and Replimune 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 Replimune Group are associated (or correlated) with Ventyx Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventyx Biosciences has no effect on the direction of Replimune i.e., Replimune and Ventyx Biosciences go up and down completely randomly.

Pair Corralation between Replimune and Ventyx Biosciences

Given the investment horizon of 90 days Replimune is expected to generate 1.42 times less return on investment than Ventyx Biosciences. But when comparing it to its historical volatility, Replimune Group is 1.03 times less risky than Ventyx Biosciences. It trades about 0.09 of its potential returns per unit of risk. Ventyx Biosciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Ventyx Biosciences on September 10, 2024 and sell it today you would earn a total of  95.00  from holding Ventyx Biosciences or generate 43.78% return on investment over 90 days.

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

Replimune Group  vs.  Ventyx Biosciences

Replimune Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ventyx Biosciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ventyx Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Ventyx Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Replimune and Ventyx Biosciences

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

The idea behind Replimune Group and Ventyx Biosciences 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.