Correlation Between Elevation Oncology and Relay Therapeutics

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

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

Diversification Opportunities for Elevation Oncology and Relay Therapeutics

0.45

Correlation Coefficient

Elevation Oncology  Relay Therapeutics

Very weak diversification

The 3 months correlation between Elevation and Relay is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elevation Oncology and Relay Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relay Therapeutics and Elevation Oncology 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 Elevation Oncology are associated (or correlated) with Relay Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relay Therapeutics has no effect on the direction of Elevation Oncology i.e., Elevation Oncology and Relay Therapeutics go up and down completely randomly.

Pair Corralation between Elevation Oncology and Relay Therapeutics

Given the investment horizon of 90 days Elevation Oncology is expected to generate 1.39 times more return on investment than Relay Therapeutics. However, Elevation Oncology is 1.39 times more volatile than Relay Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Relay Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  33.00  in Elevation Oncology on May 4, 2025 and sell it today you would earn a total of  4.00  from holding Elevation Oncology or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.3%
Values	Daily Returns

Elevation Oncology  vs.  Relay Therapeutics

Elevation Oncology

Risk-Adjusted Performance

Modest

Over the last 90 days Elevation Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak technical and fundamental indicators, Elevation Oncology showed solid returns over the last few months and may actually be approaching a breakup point.

Relay Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Relay Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Relay Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elevation Oncology and Relay Therapeutics

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

The idea behind Elevation Oncology and Relay 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.