Correlation Between Bicycle Therapeutics and Inhibrx

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

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

Diversification Opportunities for Bicycle Therapeutics and Inhibrx

0.47

Correlation Coefficient

Bicycle Therapeutics  Inhibrx

Very weak diversification

The 3 months correlation between Bicycle and Inhibrx is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx and Bicycle Therapeutics 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 Bicycle Therapeutics 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 Bicycle Therapeutics i.e., Bicycle Therapeutics and Inhibrx go up and down completely randomly.

Pair Corralation between Bicycle Therapeutics and Inhibrx

Given the investment horizon of 90 days Bicycle Therapeutics is expected to generate 1.49 times more return on investment than Inhibrx. However, Bicycle Therapeutics is 1.49 times more volatile than Inhibrx. It trades about 0.01 of its potential returns per unit of risk. Inhibrx is currently generating about -0.01 per unit of risk. If you would invest  2,083  in Bicycle Therapeutics on September 3, 2024 and sell it today you would lose (43.00) from holding Bicycle Therapeutics or give up 2.06% of portfolio value over 90 days.

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

Bicycle Therapeutics  vs.  Inhibrx

Bicycle Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bicycle Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bicycle Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Inhibrx

Risk-Adjusted Performance

0 of 100

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 fairly strong fundamental drivers, Inhibrx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bicycle Therapeutics and Inhibrx

The main advantage of trading using opposite Bicycle Therapeutics and Inhibrx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bicycle Therapeutics 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 Bicycle Therapeutics 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.