Correlation Between Caribou Biosciences and Forte Biosciences

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

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

Diversification Opportunities for Caribou Biosciences and Forte Biosciences

-0.03

Correlation Coefficient

Caribou Biosciences  Forte Biosciences

Good diversification

The 3 months correlation between Caribou and Forte is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Forte Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forte Biosciences and Caribou Biosciences 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 Caribou Biosciences are associated (or correlated) with Forte Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forte Biosciences has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Forte Biosciences go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Forte Biosciences

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Forte Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 1.31 times less risky than Forte Biosciences. The stock trades about -0.02 of its potential returns per unit of risk. The Forte Biosciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,650  in Forte Biosciences on September 24, 2024 and sell it today you would lose (716.00) from holding Forte Biosciences or give up 27.02% of portfolio value over 90 days.

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

Caribou Biosciences  vs.  Forte Biosciences

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Forte Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forte Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Forte Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Forte Biosciences

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

The idea behind Caribou Biosciences and Forte Biosciences 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.