Correlation Between Revolution Medicines and Y MAbs

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

By analyzing existing cross correlation between Revolution Medicines and Y mAbs Therapeutics, you can compare the effects of market volatilities on Revolution Medicines and Y MAbs 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 Y MAbs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolution Medicines and Y MAbs.

Diversification Opportunities for Revolution Medicines and Y MAbs

-0.04

Correlation Coefficient

Revolution Medicines  Y MAbs

Good diversification

The 3 months correlation between Revolution and YMAB is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and Y mAbs Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Y mAbs Therapeutics 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 Y MAbs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Y mAbs Therapeutics has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and Y MAbs go up and down completely randomly.

Pair Corralation between Revolution Medicines and Y MAbs

Given the investment horizon of 90 days Revolution Medicines is expected to generate 0.68 times more return on investment than Y MAbs. However, Revolution Medicines is 1.46 times less risky than Y MAbs. It trades about -0.37 of its potential returns per unit of risk. Y mAbs Therapeutics is currently generating about -0.28 per unit of risk. If you would invest  5,813  in Revolution Medicines on September 14, 2024 and sell it today you would lose (1,320) from holding Revolution Medicines or give up 22.71% of portfolio value over 90 days.

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

Revolution Medicines  vs.  Y mAbs Therapeutics

Revolution Medicines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Medicines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Revolution Medicines is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Y mAbs Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Y mAbs Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Revolution Medicines and Y MAbs

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

The idea behind Revolution Medicines and Y mAbs 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.