Correlation Between Exscientia and Black Diamond

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

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

Diversification Opportunities for Exscientia and Black Diamond

0.33

Correlation Coefficient

Exscientia  Black Diamond

Weak diversification

The 3 months correlation between Exscientia and Black is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Exscientia Ltd ADR and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap and Exscientia 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 Exscientia Ltd ADR are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Exscientia i.e., Exscientia and Black Diamond go up and down completely randomly.

Pair Corralation between Exscientia and Black Diamond

Given the investment horizon of 90 days Exscientia Ltd ADR is expected to generate 0.77 times more return on investment than Black Diamond. However, Exscientia Ltd ADR is 1.29 times less risky than Black Diamond. It trades about 0.01 of its potential returns per unit of risk. Black Diamond Therapeutics is currently generating about -0.27 per unit of risk. If you would invest  491.00  in Exscientia Ltd ADR on August 31, 2024 and sell it today you would lose (7.00) from holding Exscientia Ltd ADR or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Exscientia Ltd ADR  vs.  Black Diamond Therapeutics

Exscientia ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exscientia Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Exscientia is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Black Diamond Therap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exscientia and Black Diamond

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

The idea behind Exscientia Ltd ADR and Black Diamond Therapeutics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.