Correlation Between Solid Biosciences and AnaptysBio

Can any of the company-specific risk be diversified away by investing in both Solid Biosciences and AnaptysBio 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 AnaptysBio 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 AnaptysBio, you can compare the effects of market volatilities on Solid Biosciences and AnaptysBio 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 AnaptysBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Biosciences and AnaptysBio.

Diversification Opportunities for Solid Biosciences and AnaptysBio

0.33

Correlation Coefficient

Solid Biosciences  AnaptysBio

Weak diversification

The 3 months correlation between Solid and AnaptysBio is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Solid Biosciences LLC and AnaptysBio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AnaptysBio 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 AnaptysBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AnaptysBio has no effect on the direction of Solid Biosciences i.e., Solid Biosciences and AnaptysBio go up and down completely randomly.

Pair Corralation between Solid Biosciences and AnaptysBio

Given the investment horizon of 90 days Solid Biosciences is expected to generate 2.26 times less return on investment than AnaptysBio. In addition to that, Solid Biosciences is 1.13 times more volatile than AnaptysBio. It trades about 0.05 of its total potential returns per unit of risk. AnaptysBio is currently generating about 0.12 per unit of volatility. If you would invest  1,322  in AnaptysBio on December 30, 2024 and sell it today you would earn a total of  573.00  from holding AnaptysBio or generate 43.34% return on investment over 90 days.

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

Solid Biosciences LLC  vs.  AnaptysBio

Solid Biosciences LLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Biosciences LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Solid Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

AnaptysBio

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AnaptysBio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, AnaptysBio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Biosciences and AnaptysBio

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

The idea behind Solid Biosciences LLC and AnaptysBio 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.