Correlation Between Scholar Rock and Inhibrx

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

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

Diversification Opportunities for Scholar Rock and Inhibrx

0.29

Correlation Coefficient

Scholar Rock  Inhibrx

Modest diversification

The 3 months correlation between Scholar and Inhibrx is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Scholar Rock Holding and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx and Scholar Rock 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 Scholar Rock Holding are associated (or correlated) with Inhibrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibrx has no effect on the direction of Scholar Rock i.e., Scholar Rock and Inhibrx go up and down completely randomly.

Pair Corralation between Scholar Rock and Inhibrx

Given the investment horizon of 90 days Scholar Rock Holding is expected to generate 0.99 times more return on investment than Inhibrx. However, Scholar Rock Holding is 1.01 times less risky than Inhibrx. It trades about 0.03 of its potential returns per unit of risk. Inhibrx is currently generating about -0.05 per unit of risk. If you would invest  3,796  in Scholar Rock Holding on December 1, 2024 and sell it today you would earn a total of  86.00  from holding Scholar Rock Holding or generate 2.27% return on investment over 90 days.

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

Scholar Rock Holding  vs.  Inhibrx

Scholar Rock Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scholar Rock Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Scholar Rock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Inhibrx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inhibrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Scholar Rock and Inhibrx

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

The idea behind Scholar Rock Holding and Inhibrx 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.