Correlation Between Avidity Biosciences and Immunocore Holdings

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

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

Diversification Opportunities for Avidity Biosciences and Immunocore Holdings

-0.06

Correlation Coefficient

Avidity Biosciences  Immunocore Holdings

Good diversification

The 3 months correlation between Avidity and Immunocore is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Avidity Biosciences and Immunocore Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunocore Holdings and Avidity 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 Avidity Biosciences are associated (or correlated) with Immunocore Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunocore Holdings has no effect on the direction of Avidity Biosciences i.e., Avidity Biosciences and Immunocore Holdings go up and down completely randomly.

Pair Corralation between Avidity Biosciences and Immunocore Holdings

Considering the 90-day investment horizon Avidity Biosciences is expected to generate 1.73 times more return on investment than Immunocore Holdings. However, Avidity Biosciences is 1.73 times more volatile than Immunocore Holdings. It trades about 0.02 of its potential returns per unit of risk. Immunocore Holdings is currently generating about -0.05 per unit of risk. If you would invest  4,099  in Avidity Biosciences on September 3, 2024 and sell it today you would earn a total of  31.00  from holding Avidity Biosciences or generate 0.76% return on investment over 90 days.

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

Avidity Biosciences  vs.  Immunocore Holdings

Avidity Biosciences

Risk-Adjusted Performance

1 of 100

Insignificant

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

Immunocore Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immunocore Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Avidity Biosciences and Immunocore Holdings

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

The idea behind Avidity Biosciences and Immunocore Holdings 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.