Correlation Between Adicet Bio and Design Therapeutics

Can any of the company-specific risk be diversified away by investing in both Adicet Bio and Design 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 Adicet Bio and Design Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Adicet Bio and Design Therapeutics

0.17

Correlation Coefficient

Adicet Bio  Design Therapeutics

Average diversification

The 3 months correlation between Adicet and Design is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Adicet Bio and Design Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design Therapeutics and Adicet Bio 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 Adicet Bio are associated (or correlated) with Design Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design Therapeutics has no effect on the direction of Adicet Bio i.e., Adicet Bio and Design Therapeutics go up and down completely randomly.

Pair Corralation between Adicet Bio and Design Therapeutics

Given the investment horizon of 90 days Adicet Bio is expected to under-perform the Design Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Adicet Bio is 1.06 times less risky than Design Therapeutics. The stock trades about -0.07 of its potential returns per unit of risk. The Design Therapeutics is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  393.00  in Design Therapeutics on May 16, 2025 and sell it today you would earn a total of  149.00  from holding Design Therapeutics or generate 37.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Adicet Bio  vs.  Design Therapeutics

Adicet Bio

Risk-Adjusted Performance

Weakest

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

Design Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Design Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Design Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adicet Bio and Design Therapeutics

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

The idea behind Adicet Bio and Design Therapeutics 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.

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 the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.