Correlation Between Rallybio Corp and NuCana PLC

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

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

Diversification Opportunities for Rallybio Corp and NuCana PLC

0.77

Correlation Coefficient

Rallybio Corp  NuCana PLC

Poor diversification

The 3 months correlation between Rallybio and NuCana is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rallybio Corp and NuCana PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuCana PLC and Rallybio Corp 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 Rallybio Corp are associated (or correlated) with NuCana PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuCana PLC has no effect on the direction of Rallybio Corp i.e., Rallybio Corp and NuCana PLC go up and down completely randomly.

Pair Corralation between Rallybio Corp and NuCana PLC

Given the investment horizon of 90 days Rallybio Corp is expected to under-perform the NuCana PLC. But the stock apears to be less risky and, when comparing its historical volatility, Rallybio Corp is 1.47 times less risky than NuCana PLC. The stock trades about -0.01 of its potential returns per unit of risk. The NuCana PLC is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  93.00  in NuCana PLC on December 29, 2024 and sell it today you would earn a total of  35.00  from holding NuCana PLC or generate 37.63% return on investment over 90 days.

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

Rallybio Corp  vs.  NuCana PLC

Rallybio Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rallybio Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat 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.

NuCana PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NuCana PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NuCana PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rallybio Corp and NuCana PLC

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

The idea behind Rallybio Corp and NuCana PLC 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.