Correlation Between Zura Bio and Recursion Pharmaceuticals

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

By analyzing existing cross correlation between Zura Bio Limited and Recursion Pharmaceuticals, you can compare the effects of market volatilities on Zura Bio and Recursion Pharmaceuticals 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 Zura Bio with a short position of Recursion Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zura Bio and Recursion Pharmaceuticals.

Diversification Opportunities for Zura Bio and Recursion Pharmaceuticals

0.35

Correlation Coefficient

Zura Bio  Recursion Pharmaceuticals

Weak diversification

The 3 months correlation between Zura and Recursion is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zura Bio Limited and Recursion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recursion Pharmaceuticals and Zura Bio 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 Zura Bio Limited are associated (or correlated) with Recursion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recursion Pharmaceuticals has no effect on the direction of Zura Bio i.e., Zura Bio and Recursion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Zura Bio and Recursion Pharmaceuticals

Given the investment horizon of 90 days Zura Bio Limited is expected to generate 2.63 times more return on investment than Recursion Pharmaceuticals. However, Zura Bio is 2.63 times more volatile than Recursion Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Recursion Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest  816.00  in Zura Bio Limited on September 5, 2024 and sell it today you would lose (546.00) from holding Zura Bio Limited or give up 66.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.45%
Values	Daily Returns

Zura Bio Limited  vs.  Recursion Pharmaceuticals

Zura Bio Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zura Bio Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Recursion Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recursion Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Recursion Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zura Bio and Recursion Pharmaceuticals

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

The idea behind Zura Bio Limited and Recursion Pharmaceuticals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..