Correlation Between VectivBio Holding and Ikena Oncology

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

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

Diversification Opportunities for VectivBio Holding and Ikena Oncology

-0.36

Correlation Coefficient

VectivBio Holding  Ikena Oncology

Very good diversification

The 3 months correlation between VectivBio and Ikena is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding VectivBio Holding AG and Ikena Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikena Oncology and VectivBio Holding 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 VectivBio Holding AG are associated (or correlated) with Ikena Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikena Oncology has no effect on the direction of VectivBio Holding i.e., VectivBio Holding and Ikena Oncology go up and down completely randomly.

Pair Corralation between VectivBio Holding and Ikena Oncology

Given the investment horizon of 90 days VectivBio Holding AG is expected to generate 0.66 times more return on investment than Ikena Oncology. However, VectivBio Holding AG is 1.52 times less risky than Ikena Oncology. It trades about 0.12 of its potential returns per unit of risk. Ikena Oncology is currently generating about 0.0 per unit of risk. If you would invest  596.00  in VectivBio Holding AG on March 5, 2024 and sell it today you would earn a total of  1,089  from holding VectivBio Holding AG or generate 182.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.63%
Values	Daily Returns

VectivBio Holding AG  vs.  Ikena Oncology

VectivBio Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VectivBio Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, VectivBio Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ikena Oncology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ikena Oncology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ikena Oncology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VectivBio Holding and Ikena Oncology

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

The idea behind VectivBio Holding AG and Ikena 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.