Correlation Between Solid Biosciences and Lineage Cell

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

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

Diversification Opportunities for Solid Biosciences and Lineage Cell

0.88

Correlation Coefficient

Solid Biosciences  Lineage Cell

Very poor diversification

The 3 months correlation between Solid and Lineage is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Solid Biosciences LLC and Lineage Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage Cell Therapeutics and Solid 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 Solid Biosciences LLC are associated (or correlated) with Lineage Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage Cell Therapeutics has no effect on the direction of Solid Biosciences i.e., Solid Biosciences and Lineage Cell go up and down completely randomly.

Pair Corralation between Solid Biosciences and Lineage Cell

Given the investment horizon of 90 days Solid Biosciences is expected to generate 1.21 times less return on investment than Lineage Cell. But when comparing it to its historical volatility, Solid Biosciences LLC is 1.24 times less risky than Lineage Cell. It trades about 0.27 of its potential returns per unit of risk. Lineage Cell Therapeutics is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Lineage Cell Therapeutics on May 18, 2025 and sell it today you would earn a total of  70.00  from holding Lineage Cell Therapeutics or generate 140.0% return on investment over 90 days.

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

Solid Biosciences LLC  vs.  Lineage Cell Therapeutics

Solid Biosciences LLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Biosciences LLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Solid Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Lineage Cell Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lineage Cell Therapeutics are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lineage Cell showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Biosciences and Lineage Cell

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

The idea behind Solid Biosciences LLC and Lineage Cell 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.