Correlation Between Rallybio Corp and Sqz Biotechnologies

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

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

Diversification Opportunities for Rallybio Corp and Sqz Biotechnologies

0.53

Correlation Coefficient

Rallybio Corp  Sqz Biotechnologies

Very weak diversification

The 3 months correlation between Rallybio and Sqz is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rallybio Corp and Sqz Biotechnologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sqz Biotechnologies and Rallybio Corp 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 Rallybio Corp are associated (or correlated) with Sqz Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sqz Biotechnologies has no effect on the direction of Rallybio Corp i.e., Rallybio Corp and Sqz Biotechnologies go up and down completely randomly.

Pair Corralation between Rallybio Corp and Sqz Biotechnologies

If you would invest  111.00  in Rallybio Corp on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Rallybio Corp or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Rallybio Corp  vs.  Sqz Biotechnologies Co

Rallybio Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rallybio Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Rallybio Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sqz Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sqz Biotechnologies Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sqz Biotechnologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rallybio Corp and Sqz Biotechnologies

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

The idea behind Rallybio Corp and Sqz Biotechnologies Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.