Correlation Between Aslan Pharmaceuticals and IO Biotech

Can any of the company-specific risk be diversified away by investing in both Aslan Pharmaceuticals and IO Biotech 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 Aslan Pharmaceuticals and IO Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aslan Pharmaceuticals and IO Biotech

0.02

Correlation Coefficient

Aslan Pharmaceuticals  IO Biotech

Significant diversification

The 3 months correlation between Aslan and IOBT is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aslan Pharmaceuticals and IO Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IO Biotech and Aslan Pharmaceuticals 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 Aslan Pharmaceuticals are associated (or correlated) with IO Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IO Biotech has no effect on the direction of Aslan Pharmaceuticals i.e., Aslan Pharmaceuticals and IO Biotech go up and down completely randomly.

Pair Corralation between Aslan Pharmaceuticals and IO Biotech

Given the investment horizon of 90 days Aslan Pharmaceuticals is expected to under-perform the IO Biotech. In addition to that, Aslan Pharmaceuticals is 1.34 times more volatile than IO Biotech. It trades about -0.26 of its total potential returns per unit of risk. IO Biotech is currently generating about 0.02 per unit of volatility. If you would invest  149.00  in IO Biotech on August 2, 2024 and sell it today you would lose (21.00) from holding IO Biotech or give up 14.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	41.94%
Values	Daily Returns

Aslan Pharmaceuticals  vs.  IO Biotech

Aslan Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aslan Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Aslan Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

IO Biotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IO Biotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, IO Biotech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aslan Pharmaceuticals and IO Biotech

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

The idea behind Aslan Pharmaceuticals and IO Biotech 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.