Correlation Between Replimune and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Replimune and Acumen Pharmaceuticals

0.16

Correlation Coefficient

Replimune  Acumen Pharmaceuticals

Average diversification

The 3 months correlation between Replimune and Acumen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Replimune Group and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Replimune 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 Replimune Group are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Replimune i.e., Replimune and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Replimune and Acumen Pharmaceuticals

Given the investment horizon of 90 days Replimune Group is expected to generate 0.83 times more return on investment than Acumen Pharmaceuticals. However, Replimune Group is 1.2 times less risky than Acumen Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest  2,639  in Replimune Group on September 3, 2024 and sell it today you would lose (1,231) from holding Replimune Group or give up 46.65% of portfolio value over 90 days.

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

Replimune Group  vs.  Acumen Pharmaceuticals

Replimune Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

Acumen Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Acumen Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Replimune and Acumen Pharmaceuticals

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

The idea behind Replimune Group and Acumen Pharmaceuticals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.