Correlation Between Passage Bio and Cambium Networks

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

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

Diversification Opportunities for Passage Bio and Cambium Networks

-0.07

Correlation Coefficient

Passage Bio  Cambium Networks

Good diversification

The 3 months correlation between Passage and Cambium is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Cambium Networks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambium Networks Corp and Passage Bio 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 Passage Bio are associated (or correlated) with Cambium Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambium Networks Corp has no effect on the direction of Passage Bio i.e., Passage Bio and Cambium Networks go up and down completely randomly.

Pair Corralation between Passage Bio and Cambium Networks

Given the investment horizon of 90 days Passage Bio is expected to generate 2.11 times more return on investment than Cambium Networks. However, Passage Bio is 2.11 times more volatile than Cambium Networks Corp. It trades about 0.03 of its potential returns per unit of risk. Cambium Networks Corp is currently generating about -0.24 per unit of risk. If you would invest  68.00  in Passage Bio on September 20, 2024 and sell it today you would lose (7.00) from holding Passage Bio or give up 10.29% of portfolio value over 90 days.

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

Passage Bio  vs.  Cambium Networks Corp

Passage Bio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Passage Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Passage Bio reported solid returns over the last few months and may actually be approaching a breakup point.

Cambium Networks Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambium Networks Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers 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.

Pair Trading with Passage Bio and Cambium Networks

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

The idea behind Passage Bio and Cambium Networks Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..