Correlation Between Assembly Biosciences and Gossamer Bio

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

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

Diversification Opportunities for Assembly Biosciences and Gossamer Bio

0.79

Correlation Coefficient

Assembly Biosciences  Gossamer Bio

Poor diversification

The 3 months correlation between Assembly and Gossamer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Assembly Biosciences and Gossamer Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossamer Bio and Assembly Biosciences 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 Assembly Biosciences are associated (or correlated) with Gossamer Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossamer Bio has no effect on the direction of Assembly Biosciences i.e., Assembly Biosciences and Gossamer Bio go up and down completely randomly.

Pair Corralation between Assembly Biosciences and Gossamer Bio

Given the investment horizon of 90 days Assembly Biosciences is expected to generate 1.48 times less return on investment than Gossamer Bio. But when comparing it to its historical volatility, Assembly Biosciences is 1.12 times less risky than Gossamer Bio. It trades about 0.18 of its potential returns per unit of risk. Gossamer Bio is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Gossamer Bio on May 1, 2025 and sell it today you would earn a total of  102.00  from holding Gossamer Bio or generate 96.23% return on investment over 90 days.

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

Assembly Biosciences  vs.  Gossamer Bio

Assembly Biosciences

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assembly Biosciences are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Assembly Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Gossamer Bio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gossamer Bio are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gossamer Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Assembly Biosciences and Gossamer Bio

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

The idea behind Assembly Biosciences and Gossamer Bio 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.