Correlation Between Design Therapeutics and Hillevax

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

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

Diversification Opportunities for Design Therapeutics and Hillevax

0.72

Correlation Coefficient

Design Therapeutics  Hillevax

Poor diversification

The 3 months correlation between Design and Hillevax is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax and Design 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 Design Therapeutics are associated (or correlated) with Hillevax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillevax has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and Hillevax go up and down completely randomly.

Pair Corralation between Design Therapeutics and Hillevax

Given the investment horizon of 90 days Design Therapeutics is expected to generate 2.18 times more return on investment than Hillevax. However, Design Therapeutics is 2.18 times more volatile than Hillevax. It trades about 0.06 of its potential returns per unit of risk. Hillevax is currently generating about 0.1 per unit of risk. If you would invest  584.00  in Design Therapeutics on September 12, 2024 and sell it today you would earn a total of  78.00  from holding Design Therapeutics or generate 13.36% return on investment over 90 days.

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

Design Therapeutics  vs.  Hillevax

Design Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Design Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Design Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Hillevax

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hillevax are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hillevax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Design Therapeutics and Hillevax

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

The idea behind Design Therapeutics and Hillevax 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.