Correlation Between Effector Therapeutics and Humacyte

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

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

Diversification Opportunities for Effector Therapeutics and Humacyte

0.26

Correlation Coefficient

Effector Therapeutics  Humacyte

Modest diversification

The 3 months correlation between Effector and Humacyte is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Effector Therapeutics and Humacyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humacyte and Effector 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 Effector Therapeutics are associated (or correlated) with Humacyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humacyte has no effect on the direction of Effector Therapeutics i.e., Effector Therapeutics and Humacyte go up and down completely randomly.

Pair Corralation between Effector Therapeutics and Humacyte

If you would invest  161.00  in Humacyte on September 3, 2024 and sell it today you would earn a total of  10.00  from holding Humacyte or generate 6.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Effector Therapeutics  vs.  Humacyte

Effector Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Effector Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Effector Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Humacyte

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humacyte are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Humacyte showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Effector Therapeutics and Humacyte

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

The idea behind Effector Therapeutics and Humacyte 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.