Correlation Between Embecta Corp and Adicet Bio

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

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

Diversification Opportunities for Embecta Corp and Adicet Bio

-0.17

Correlation Coefficient

Embecta Corp  Adicet Bio

Good diversification

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

Pair Corralation between Embecta Corp and Adicet Bio

Given the investment horizon of 90 days Embecta Corp is expected to under-perform the Adicet Bio. But the stock apears to be less risky and, when comparing its historical volatility, Embecta Corp is 1.58 times less risky than Adicet Bio. The stock trades about -0.07 of its potential returns per unit of risk. The Adicet Bio is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Adicet Bio on May 7, 2025 and sell it today you would earn a total of  23.00  from holding Adicet Bio or generate 46.94% return on investment over 90 days.

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

Embecta Corp  vs.  Adicet Bio

Embecta Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Adicet Bio

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Adicet Bio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Adicet Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embecta Corp and Adicet Bio

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

The idea behind Embecta Corp and Adicet 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .