Correlation Between Dyne Therapeutics and GlycoMimetics

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

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

Diversification Opportunities for Dyne Therapeutics and GlycoMimetics

-0.7

Correlation Coefficient

Dyne Therapeutics  GlycoMimetics

Excellent diversification

The 3 months correlation between Dyne and GlycoMimetics is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dyne Therapeutics and GlycoMimetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlycoMimetics and Dyne 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 Dyne Therapeutics are associated (or correlated) with GlycoMimetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlycoMimetics has no effect on the direction of Dyne Therapeutics i.e., Dyne Therapeutics and GlycoMimetics go up and down completely randomly.

Pair Corralation between Dyne Therapeutics and GlycoMimetics

Considering the 90-day investment horizon Dyne Therapeutics is expected to under-perform the GlycoMimetics. But the stock apears to be less risky and, when comparing its historical volatility, Dyne Therapeutics is 5.85 times less risky than GlycoMimetics. The stock trades about -0.09 of its potential returns per unit of risk. The GlycoMimetics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16.00  in GlycoMimetics on September 18, 2024 and sell it today you would earn a total of  7.31  from holding GlycoMimetics or generate 45.69% return on investment over 90 days.

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

Dyne Therapeutics  vs.  GlycoMimetics

Dyne Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dyne Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GlycoMimetics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GlycoMimetics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, GlycoMimetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dyne Therapeutics and GlycoMimetics

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

The idea behind Dyne Therapeutics and GlycoMimetics 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.