Correlation Between Brickell Biotech and Abcellera Biologics

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

Diversification Opportunities for Brickell Biotech and Abcellera Biologics

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Brickell and Abcellera is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brickell Biotech and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and Brickell Biotech 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 Brickell Biotech are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Brickell Biotech i.e., Brickell Biotech and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Brickell Biotech and Abcellera Biologics

Considering the 90-day investment horizon Brickell Biotech is expected to generate 1.42 times more return on investment than Abcellera Biologics. However, Brickell Biotech is 1.42 times more volatile than Abcellera Biologics. It trades about -0.03 of its potential returns per unit of risk. Abcellera Biologics is currently generating about -0.05 per unit of risk. If you would invest  3,645  in Brickell Biotech on May 11, 2022 and sell it today you would lose (3,238)  from holding Brickell Biotech or give up 88.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy83.7%
ValuesDaily Returns

Brickell Biotech  vs.  Abcellera Biologics

 Performance (%) 
       Timeline  
Brickell Biotech 
Brickell Performance
0 of 100
Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brickell Price Channel

Abcellera Biologics 
Abcellera Performance
23 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Abcellera Biologics revealed solid returns over the last few months and may actually be approaching a breakup point.

Abcellera Price Channel

Brickell Biotech and Abcellera Biologics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brickell Biotech and Abcellera Biologics

The main advantage of trading using opposite Brickell Biotech and Abcellera Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brickell Biotech position performs unexpectedly, Abcellera Biologics 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 Abcellera Biologics will offset losses from the drop in Abcellera Biologics' long position.
The idea behind Brickell Biotech and Abcellera Biologics 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.

Abcellera Biologics

Pair trading matchups for Abcellera Biologics

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 Transaction History module to view history of all your transactions and understand their impact on performance.

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