Correlation Between Relay Therapeutics and X4 Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Relay Therapeutics and X4 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 Relay Therapeutics and X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Relay Therapeutics and X4 Pharmaceuticals, you can compare the effects of market volatilities on Relay Therapeutics and X4 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 Relay Therapeutics with a short position of X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relay Therapeutics and X4 Pharmaceuticals.

Diversification Opportunities for Relay Therapeutics and X4 Pharmaceuticals

0.75

Correlation Coefficient

Relay Therapeutics  X4 Pharmaceuticals

Poor diversification

The 3 months correlation between Relay and XFOR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Relay Therapeutics and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals and Relay 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 Relay Therapeutics are associated (or correlated) with X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Relay Therapeutics i.e., Relay Therapeutics and X4 Pharmaceuticals go up and down completely randomly.

Pair Corralation between Relay Therapeutics and X4 Pharmaceuticals

Given the investment horizon of 90 days Relay Therapeutics is expected to generate 0.54 times more return on investment than X4 Pharmaceuticals. However, Relay Therapeutics is 1.85 times less risky than X4 Pharmaceuticals. It trades about -0.11 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about -0.15 per unit of risk. If you would invest  436.00  in Relay Therapeutics on December 27, 2024 and sell it today you would lose (150.00) from holding Relay Therapeutics or give up 34.4% of portfolio value over 90 days.

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

Relay Therapeutics  vs.  X4 Pharmaceuticals

Relay Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Relay Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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.

X4 Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days X4 Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Relay Therapeutics and X4 Pharmaceuticals

The main advantage of trading using opposite Relay Therapeutics and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relay Therapeutics position performs unexpectedly, X4 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.

The idea behind Relay Therapeutics and X4 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.