Correlation Between Solid Biosciences and Adverum Biotechnologies

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

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

Diversification Opportunities for Solid Biosciences and Adverum Biotechnologies

0.4

Correlation Coefficient

Solid Biosciences  Adverum Biotechnologies

Very weak diversification

The 3 months correlation between Solid and Adverum is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Solid Biosciences LLC and Adverum Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adverum Biotechnologies and Solid Biosciences 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 Solid Biosciences LLC are associated (or correlated) with Adverum Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adverum Biotechnologies has no effect on the direction of Solid Biosciences i.e., Solid Biosciences and Adverum Biotechnologies go up and down completely randomly.

Pair Corralation between Solid Biosciences and Adverum Biotechnologies

Given the investment horizon of 90 days Solid Biosciences LLC is expected to generate 1.64 times more return on investment than Adverum Biotechnologies. However, Solid Biosciences is 1.64 times more volatile than Adverum Biotechnologies. It trades about 0.02 of its potential returns per unit of risk. Adverum Biotechnologies is currently generating about -0.12 per unit of risk. If you would invest  570.00  in Solid Biosciences LLC on November 29, 2024 and sell it today you would lose (27.00) from holding Solid Biosciences LLC or give up 4.74% of portfolio value over 90 days.

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

Solid Biosciences LLC  vs.  Adverum Biotechnologies

Solid Biosciences LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Biosciences LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Solid Biosciences may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Adverum Biotechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adverum Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Solid Biosciences and Adverum Biotechnologies

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

The idea behind Solid Biosciences LLC and Adverum Biotechnologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.