Correlation Between Durect and Exicure

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Can any of the company-specific risk be diversified away by investing in both Durect and Exicure 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 Durect and Exicure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Durect and Exicure, you can compare the effects of market volatilities on Durect and Exicure 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 Durect with a short position of Exicure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Durect and Exicure.

Diversification Opportunities for Durect and Exicure

-0.74
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Durect and Exicure

Given the investment horizon of 90 days Durect is expected to under-perform the Exicure. But the stock apears to be less risky and, when comparing its historical volatility, Durect is 4.75 times less risky than Exicure. The stock trades about -0.18 of its potential returns per unit of risk. The Exicure is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  174.00  in Exicure on September 6, 2024 and sell it today you would earn a total of  1,978  from holding Exicure or generate 1136.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Durect  vs.  Exicure

 Performance 
       Timeline  
Durect 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Durect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.
Exicure 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Exicure are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exicure reported solid returns over the last few months and may actually be approaching a breakup point.

Durect and Exicure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Durect and Exicure

The main advantage of trading using opposite Durect and Exicure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Durect position performs unexpectedly, Exicure 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 Exicure will offset losses from the drop in Exicure's long position.
The idea behind Durect and Exicure 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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