Correlation Between Arcus Biosciences and Vyne Therapeutics

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

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

Diversification Opportunities for Arcus Biosciences and Vyne Therapeutics

-0.22

Correlation Coefficient

Arcus Biosciences  Vyne Therapeutics

Very good diversification

The 3 months correlation between Arcus and Vyne is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Vyne Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vyne Therapeutics and Arcus Biosciences 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 Arcus Biosciences are associated (or correlated) with Vyne Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vyne Therapeutics has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Vyne Therapeutics go up and down completely randomly.

Pair Corralation between Arcus Biosciences and Vyne Therapeutics

Given the investment horizon of 90 days Arcus Biosciences is expected to generate 5.22 times less return on investment than Vyne Therapeutics. But when comparing it to its historical volatility, Arcus Biosciences is 1.67 times less risky than Vyne Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Vyne Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  428.00  in Vyne Therapeutics on September 25, 2024 and sell it today you would lose (131.00) from holding Vyne Therapeutics or give up 30.61% of portfolio value over 90 days.

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

Arcus Biosciences  vs.  Vyne Therapeutics

Arcus Biosciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcus Biosciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Arcus Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vyne Therapeutics

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vyne Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Vyne Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcus Biosciences and Vyne Therapeutics

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

The idea behind Arcus Biosciences and Vyne 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.