Correlation Between Precision BioSciences and Corbus Pharmaceuticals

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

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

Diversification Opportunities for Precision BioSciences and Corbus Pharmaceuticals

0.76

Correlation Coefficient

Precision BioSciences  Corbus Pharmaceuticals

Poor diversification

The 3 months correlation between Precision and Corbus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and Corbus Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbus Pharmaceuticals and Precision 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 Precision BioSciences are associated (or correlated) with Corbus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbus Pharmaceuticals has no effect on the direction of Precision BioSciences i.e., Precision BioSciences and Corbus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Precision BioSciences and Corbus Pharmaceuticals

Given the investment horizon of 90 days Precision BioSciences is expected to generate 0.35 times more return on investment than Corbus Pharmaceuticals. However, Precision BioSciences is 2.83 times less risky than Corbus Pharmaceuticals. It trades about -0.16 of its potential returns per unit of risk. Corbus Pharmaceuticals Holding is currently generating about -0.13 per unit of risk. If you would invest  1,040  in Precision BioSciences on September 3, 2024 and sell it today you would lose (311.00) from holding Precision BioSciences or give up 29.9% of portfolio value over 90 days.

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

Precision BioSciences  vs.  Corbus Pharmaceuticals Holding

Precision BioSciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision BioSciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Corbus Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corbus Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Precision BioSciences and Corbus Pharmaceuticals

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

The idea behind Precision BioSciences and Corbus Pharmaceuticals Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.