Correlation Between Dyadic International and Aura Biosciences

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

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

Diversification Opportunities for Dyadic International and Aura Biosciences

-0.45

Correlation Coefficient

Dyadic International  Aura Biosciences

Very good diversification

The 3 months correlation between Dyadic and Aura is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dyadic International and Aura Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Biosciences and Dyadic International 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 Dyadic International are associated (or correlated) with Aura Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Biosciences has no effect on the direction of Dyadic International i.e., Dyadic International and Aura Biosciences go up and down completely randomly.

Pair Corralation between Dyadic International and Aura Biosciences

Given the investment horizon of 90 days Dyadic International is expected to generate 2.57 times more return on investment than Aura Biosciences. However, Dyadic International is 2.57 times more volatile than Aura Biosciences. It trades about 0.15 of its potential returns per unit of risk. Aura Biosciences is currently generating about -0.05 per unit of risk. If you would invest  117.00  in Dyadic International on September 18, 2024 and sell it today you would earn a total of  24.50  from holding Dyadic International or generate 20.94% return on investment over 90 days.

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

Dyadic International  vs.  Aura Biosciences

Dyadic International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dyadic International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Dyadic International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aura Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aura Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aura Biosciences is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dyadic International and Aura Biosciences

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

The idea behind Dyadic International and Aura Biosciences 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.