Correlation Between Xilio Development and RAPT Therapeutics

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

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

Diversification Opportunities for Xilio Development and RAPT Therapeutics

0.15

Correlation Coefficient

Xilio Development  RAPT Therapeutics

Average diversification

The 3 months correlation between Xilio and RAPT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Xilio Development and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and Xilio Development 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 Xilio Development are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Xilio Development i.e., Xilio Development and RAPT Therapeutics go up and down completely randomly.

Pair Corralation between Xilio Development and RAPT Therapeutics

Considering the 90-day investment horizon Xilio Development is expected to generate 0.94 times more return on investment than RAPT Therapeutics. However, Xilio Development is 1.07 times less risky than RAPT Therapeutics. It trades about 0.11 of its potential returns per unit of risk. RAPT Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  74.00  in Xilio Development on September 2, 2024 and sell it today you would earn a total of  35.00  from holding Xilio Development or generate 47.3% return on investment over 90 days.

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

Xilio Development  vs.  RAPT Therapeutics

Xilio Development

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xilio Development are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Xilio Development displayed solid returns over the last few months and may actually be approaching a breakup point.

RAPT Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAPT Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xilio Development and RAPT Therapeutics

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

The idea behind Xilio Development and RAPT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.