Correlation Between Rallybio Corp and Tenaya Therapeutics

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

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

Diversification Opportunities for Rallybio Corp and Tenaya Therapeutics

0.09

Correlation Coefficient

Rallybio Corp  Tenaya Therapeutics

Significant diversification

The 3 months correlation between Rallybio and Tenaya is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rallybio Corp and Tenaya Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaya Therapeutics 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 Tenaya Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaya Therapeutics has no effect on the direction of Rallybio Corp i.e., Rallybio Corp and Tenaya Therapeutics go up and down completely randomly.

Pair Corralation between Rallybio Corp and Tenaya Therapeutics

Given the investment horizon of 90 days Rallybio Corp is expected to generate 6.4 times less return on investment than Tenaya Therapeutics. But when comparing it to its historical volatility, Rallybio Corp is 3.1 times less risky than Tenaya Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Tenaya Therapeutics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  253.00  in Tenaya Therapeutics on September 3, 2024 and sell it today you would earn a total of  104.00  from holding Tenaya Therapeutics or generate 41.11% return on investment over 90 days.

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

Rallybio Corp  vs.  Tenaya Therapeutics

Rallybio Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rallybio Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Rallybio Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tenaya Therapeutics

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Rallybio Corp and Tenaya Therapeutics

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

The idea behind Rallybio Corp and Tenaya 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.