Correlation Between Unity Biotechnology and Elevation Oncology

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

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

Diversification Opportunities for Unity Biotechnology and Elevation Oncology

0.35

Correlation Coefficient

Unity Biotechnology  Elevation Oncology

Weak diversification

The 3 months correlation between Unity and Elevation is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Unity Biotechnology and Elevation Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevation Oncology and Unity Biotechnology 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 Unity Biotechnology are associated (or correlated) with Elevation Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevation Oncology has no effect on the direction of Unity Biotechnology i.e., Unity Biotechnology and Elevation Oncology go up and down completely randomly.

Pair Corralation between Unity Biotechnology and Elevation Oncology

Considering the 90-day investment horizon Unity Biotechnology is expected to under-perform the Elevation Oncology. But the stock apears to be less risky and, when comparing its historical volatility, Unity Biotechnology is 1.84 times less risky than Elevation Oncology. The stock trades about -0.15 of its potential returns per unit of risk. The Elevation Oncology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Elevation Oncology on August 31, 2024 and sell it today you would lose (11.00) from holding Elevation Oncology or give up 15.07% of portfolio value over 90 days.

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

Unity Biotechnology  vs.  Elevation Oncology

Unity Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unity Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Elevation Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevation Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Unity Biotechnology and Elevation Oncology

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

The idea behind Unity Biotechnology and Elevation Oncology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.