Correlation Between Relmada Therapeutics and RAPT Therapeutics

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

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

Diversification Opportunities for Relmada Therapeutics and RAPT Therapeutics

0.27

Correlation Coefficient

Relmada Therapeutics  RAPT Therapeutics

Modest diversification

The 3 months correlation between Relmada and RAPT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Relmada Therapeutics and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and Relmada 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 Relmada Therapeutics are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Relmada Therapeutics i.e., Relmada Therapeutics and RAPT Therapeutics go up and down completely randomly.

Pair Corralation between Relmada Therapeutics and RAPT Therapeutics

Given the investment horizon of 90 days Relmada Therapeutics is expected to under-perform the RAPT Therapeutics. In addition to that, Relmada Therapeutics is 1.35 times more volatile than RAPT Therapeutics. It trades about -0.21 of its total potential returns per unit of risk. RAPT Therapeutics is currently generating about -0.02 per unit of volatility. If you would invest  114.00  in RAPT Therapeutics on December 4, 2024 and sell it today you would lose (4.00) from holding RAPT Therapeutics or give up 3.51% of portfolio value over 90 days.

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

Relmada Therapeutics  vs.  RAPT Therapeutics

Relmada Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Relmada 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 primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

RAPT Therapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RAPT Therapeutics are ranked lower than 4 (%) 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.

Pair Trading with Relmada Therapeutics and RAPT Therapeutics

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

The idea behind Relmada Therapeutics and RAPT 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.