Correlation Between QuantumSi and Beam Therapeutics

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

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

Diversification Opportunities for QuantumSi and Beam Therapeutics

0.38

Correlation Coefficient

QuantumSi  Beam Therapeutics

Weak diversification

The 3 months correlation between QuantumSi and Beam is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding QuantumSi and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics and QuantumSi 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 QuantumSi are associated (or correlated) with Beam Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Therapeutics has no effect on the direction of QuantumSi i.e., QuantumSi and Beam Therapeutics go up and down completely randomly.

Pair Corralation between QuantumSi and Beam Therapeutics

Considering the 90-day investment horizon QuantumSi is expected to generate 1.98 times more return on investment than Beam Therapeutics. However, QuantumSi is 1.98 times more volatile than Beam Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Beam Therapeutics is currently generating about 0.0 per unit of risk. If you would invest  223.00  in QuantumSi on September 2, 2024 and sell it today you would lose (98.00) from holding QuantumSi or give up 43.95% of portfolio value over 90 days.

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

QuantumSi  vs.  Beam Therapeutics

QuantumSi

Risk-Adjusted Performance

6 of 100

Modest

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

Beam Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Beam Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QuantumSi and Beam Therapeutics

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

The idea behind QuantumSi and Beam 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.