Correlation Between NGM Biopharmaceutica and Gracell Biotechnologies

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

Diversification Opportunities for NGM Biopharmaceutica and Gracell Biotechnologies

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between NGM and Gracell is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NGM Biopharmaceuticals and Gracell Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gracell Biotechnologies and NGM Biopharmaceutica 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 NGM Biopharmaceuticals are associated (or correlated) with Gracell Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gracell Biotechnologies has no effect on the direction of NGM Biopharmaceutica i.e., NGM Biopharmaceutica and Gracell Biotechnologies go up and down completely randomly.

Pair Corralation between NGM Biopharmaceutica and Gracell Biotechnologies

If you would invest  402.00  in Gracell Biotechnologies on July 19, 2024 and sell it today you would earn a total of  0.00  from holding Gracell Biotechnologies or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

NGM Biopharmaceuticals  vs.  Gracell Biotechnologies

 Performance 
       Timeline  
NGM Biopharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NGM Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, NGM Biopharmaceutica is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Gracell Biotechnologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

NGM Biopharmaceutica and Gracell Biotechnologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NGM Biopharmaceutica and Gracell Biotechnologies

The main advantage of trading using opposite NGM Biopharmaceutica and Gracell Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGM Biopharmaceutica position performs unexpectedly, Gracell Biotechnologies 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 Gracell Biotechnologies will offset losses from the drop in Gracell Biotechnologies' long position.
The idea behind NGM Biopharmaceuticals and Gracell Biotechnologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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