Correlation Between Iovance Biotherapeutics and Adagene

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

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

Diversification Opportunities for Iovance Biotherapeutics and Adagene

0.66

Correlation Coefficient

Iovance Biotherapeutics  Adagene

Poor diversification

The 3 months correlation between Iovance and Adagene is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Adagene go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and Adagene

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to generate 1.81 times less return on investment than Adagene. But when comparing it to its historical volatility, Iovance Biotherapeutics is 1.15 times less risky than Adagene. It trades about 0.03 of its potential returns per unit of risk. Adagene is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Adagene on September 13, 2024 and sell it today you would earn a total of  75.00  from holding Adagene or generate 54.74% return on investment over 90 days.

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

Iovance Biotherapeutics  vs.  Adagene

Iovance Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iovance Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Iovance Biotherapeutics and Adagene

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

The idea behind Iovance Biotherapeutics and Adagene 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.