Correlation Between Revolution Medicines and Bioatla

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

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

Diversification Opportunities for Revolution Medicines and Bioatla

0.16

Correlation Coefficient

Revolution Medicines  Bioatla

Average diversification

The 3 months correlation between Revolution and Bioatla is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and Bioatla in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioatla and Revolution Medicines 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 Revolution Medicines are associated (or correlated) with Bioatla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioatla has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and Bioatla go up and down completely randomly.

Pair Corralation between Revolution Medicines and Bioatla

Given the investment horizon of 90 days Revolution Medicines is expected to generate 0.42 times more return on investment than Bioatla. However, Revolution Medicines is 2.36 times less risky than Bioatla. It trades about 0.21 of its potential returns per unit of risk. Bioatla is currently generating about 0.01 per unit of risk. If you would invest  4,263  in Revolution Medicines on August 30, 2024 and sell it today you would earn a total of  1,595  from holding Revolution Medicines or generate 37.41% return on investment over 90 days.

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

Revolution Medicines  vs.  Bioatla

Revolution Medicines

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Medicines are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Revolution Medicines exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bioatla

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Revolution Medicines and Bioatla

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

The idea behind Revolution Medicines and Bioatla 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.