Correlation Between Rani Therapeutics and IGM Biosciences

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

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

Diversification Opportunities for Rani Therapeutics and IGM Biosciences

-0.15

Correlation Coefficient

Rani Therapeutics  IGM Biosciences

Good diversification

The 3 months correlation between Rani and IGM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rani Therapeutics Holdings and IGM Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Biosciences and Rani 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 Rani Therapeutics Holdings are associated (or correlated) with IGM Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Biosciences has no effect on the direction of Rani Therapeutics i.e., Rani Therapeutics and IGM Biosciences go up and down completely randomly.

Pair Corralation between Rani Therapeutics and IGM Biosciences

Given the investment horizon of 90 days Rani Therapeutics Holdings is expected to under-perform the IGM Biosciences. In addition to that, Rani Therapeutics is 1.31 times more volatile than IGM Biosciences. It trades about -0.02 of its total potential returns per unit of risk. IGM Biosciences is currently generating about 0.04 per unit of volatility. If you would invest  986.00  in IGM Biosciences on August 31, 2024 and sell it today you would earn a total of  18.00  from holding IGM Biosciences or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Rani Therapeutics Holdings  vs.  IGM Biosciences

Rani Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rani Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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 recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IGM Biosciences

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Rani Therapeutics and IGM Biosciences

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

The idea behind Rani Therapeutics Holdings and IGM Biosciences 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.