Correlation Between Transgene and HCW Biologics

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

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

Diversification Opportunities for Transgene and HCW Biologics

0.0

Correlation Coefficient

Transgene  HCW Biologics

Pay attention - limited upside

The 3 months correlation between Transgene and HCW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transgene SA and HCW Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCW Biologics and Transgene 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 Transgene SA are associated (or correlated) with HCW Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCW Biologics has no effect on the direction of Transgene i.e., Transgene and HCW Biologics go up and down completely randomly.

Pair Corralation between Transgene and HCW Biologics

If you would invest  43.00  in HCW Biologics on December 29, 2024 and sell it today you would lose (13.00) from holding HCW Biologics or give up 30.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Transgene SA  vs.  HCW Biologics

Transgene SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transgene SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transgene is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HCW Biologics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HCW Biologics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HCW Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transgene and HCW Biologics

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

The idea behind Transgene SA and HCW Biologics 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.