Correlation Between Ambrx Biopharma and Gracell Biotechnologies

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

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

Diversification Opportunities for Ambrx Biopharma and Gracell Biotechnologies

0.74

Correlation Coefficient

Ambrx Biopharma  Gracell Biotechnologies

Poor diversification

The 3 months correlation between Ambrx and Gracell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ambrx Biopharma American and Gracell Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gracell Biotechnologies and Ambrx 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 Ambrx Biopharma American are associated (or correlated) with Gracell Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gracell Biotechnologies has no effect on the direction of Ambrx Biopharma i.e., Ambrx Biopharma and Gracell Biotechnologies go up and down completely randomly.

Pair Corralation between Ambrx Biopharma and Gracell Biotechnologies

Given the investment horizon of 90 days Ambrx Biopharma American is expected to generate 1.29 times more return on investment than Gracell Biotechnologies. However, Ambrx Biopharma is 1.29 times more volatile than Gracell Biotechnologies. It trades about 0.18 of its potential returns per unit of risk. Gracell Biotechnologies is currently generating about -0.36 per unit of risk. If you would invest  1,456  in Ambrx Biopharma American on September 30, 2024 and sell it today you would earn a total of  117.00  from holding Ambrx Biopharma American or generate 8.04% return on investment over 90 days.

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

Ambrx Biopharma American  vs.  Gracell Biotechnologies

Ambrx Biopharma American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambrx Biopharma American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ambrx Biopharma is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ambrx Biopharma and Gracell Biotechnologies

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

The idea behind Ambrx Biopharma American and Gracell Biotechnologies 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.