Correlation Between Vor Biopharma and CytomX Therapeutics

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

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

Diversification Opportunities for Vor Biopharma and CytomX Therapeutics

-0.01

Correlation Coefficient

Vor Biopharma  CytomX Therapeutics

Good diversification

The 3 months correlation between Vor and CytomX is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vor Biopharma and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX Therapeutics and Vor Biopharma 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 Vor Biopharma are associated (or correlated) with CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Vor Biopharma i.e., Vor Biopharma and CytomX Therapeutics go up and down completely randomly.

Pair Corralation between Vor Biopharma and CytomX Therapeutics

Considering the 90-day investment horizon Vor Biopharma is expected to generate 3.03 times more return on investment than CytomX Therapeutics. However, Vor Biopharma is 3.03 times more volatile than CytomX Therapeutics. It trades about 0.22 of its potential returns per unit of risk. CytomX Therapeutics is currently generating about -0.24 per unit of risk. If you would invest  98.00  in Vor Biopharma on October 13, 2024 and sell it today you would earn a total of  57.50  from holding Vor Biopharma or generate 58.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Vor Biopharma  vs.  CytomX Therapeutics

Vor Biopharma

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vor Biopharma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Vor Biopharma reported solid returns over the last few months and may actually be approaching a breakup point.

CytomX Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vor Biopharma and CytomX Therapeutics

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

The idea behind Vor Biopharma and CytomX 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.