Correlation Between Day One and Replimune

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

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

Diversification Opportunities for Day One and Replimune

0.19

Correlation Coefficient

Day One  Replimune

Average diversification

The 3 months correlation between Day and Replimune is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and Replimune Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Replimune Group and Day One 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 Day One Biopharmaceuticals are associated (or correlated) with Replimune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Replimune Group has no effect on the direction of Day One i.e., Day One and Replimune go up and down completely randomly.

Pair Corralation between Day One and Replimune

Given the investment horizon of 90 days Day One is expected to generate 11.22 times less return on investment than Replimune. But when comparing it to its historical volatility, Day One Biopharmaceuticals is 2.28 times less risky than Replimune. It trades about 0.02 of its potential returns per unit of risk. Replimune Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,028  in Replimune Group on August 31, 2024 and sell it today you would earn a total of  380.00  from holding Replimune Group or generate 36.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Day One Biopharmaceuticals  vs.  Replimune Group

Day One Biopharmaceu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Day One Biopharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Replimune Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Day One and Replimune

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

The idea behind Day One Biopharmaceuticals and Replimune Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.