Correlation Between Applied Genetic and CRISPR Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Applied Genetic and CRISPR 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 Applied Genetic and CRISPR Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Genetic Tech and CRISPR Therapeutics AG, you can compare the effects of market volatilities on Applied Genetic and CRISPR 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 Applied Genetic with a short position of CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Genetic and CRISPR Therapeutics.

Diversification Opportunities for Applied Genetic and CRISPR Therapeutics

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Applied and CRISPR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Applied Genetic Tech and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics and Applied Genetic 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 Applied Genetic Tech are associated (or correlated) with CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Applied Genetic i.e., Applied Genetic and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Applied Genetic and CRISPR Therapeutics

Given the investment horizon of 90 days Applied Genetic Tech is expected to under-perform the CRISPR Therapeutics. In addition to that, Applied Genetic is 1.12 times more volatile than CRISPR Therapeutics AG. It trades about -0.44 of its total potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.07 per unit of volatility. If you would invest  6,276  in CRISPR Therapeutics AG on July 6, 2022 and sell it today you would earn a total of  291.00  from holding CRISPR Therapeutics AG or generate 4.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Applied Genetic Tech  vs.  CRISPR Therapeutics AG

 Performance (%) 
       Timeline  
Applied Genetic Tech 
Applied Performance
0 of 100
Over the last 90 days Applied Genetic Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied Price Channel

CRISPR Therapeutics 
CRISPR Performance
0 of 100
Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CRISPR Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

CRISPR Price Channel

Applied Genetic and CRISPR Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Genetic and CRISPR Therapeutics

The main advantage of trading using opposite Applied Genetic and CRISPR Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Genetic position performs unexpectedly, CRISPR 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 CRISPR Therapeutics will offset losses from the drop in CRISPR Therapeutics' long position.
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The idea behind Applied Genetic Tech and CRISPR Therapeutics AG 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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