Correlation Between Precision BioSciences and Hillevax

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

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

Diversification Opportunities for Precision BioSciences and Hillevax

-0.7

Correlation Coefficient

Precision BioSciences  Hillevax

Excellent diversification

The 3 months correlation between Precision and Hillevax is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax 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 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 Precision BioSciences i.e., Precision BioSciences and Hillevax go up and down completely randomly.

Pair Corralation between Precision BioSciences and Hillevax

Given the investment horizon of 90 days Precision BioSciences is expected to under-perform the Hillevax. In addition to that, Precision BioSciences is 1.39 times more volatile than Hillevax. It trades about -0.27 of its total potential returns per unit of risk. Hillevax is currently generating about 0.1 per unit of volatility. If you would invest  173.00  in Hillevax on September 12, 2024 and sell it today you would earn a total of  24.00  from holding Hillevax or generate 13.87% return on investment over 90 days.

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

Precision BioSciences  vs.  Hillevax

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 weak 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.

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 Precision BioSciences and Hillevax

The main advantage of trading using opposite Precision BioSciences and Hillevax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision BioSciences 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 Precision BioSciences 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.