Correlation Between Third Harmonic and Instil Bio

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

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

Diversification Opportunities for Third Harmonic and Instil Bio

0.6

Correlation Coefficient

Third Harmonic  Instil Bio

Poor diversification

The 3 months correlation between Third and Instil is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Third Harmonic Bio and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Third Harmonic 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 Third Harmonic Bio are associated (or correlated) with Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Third Harmonic i.e., Third Harmonic and Instil Bio go up and down completely randomly.

Pair Corralation between Third Harmonic and Instil Bio

Given the investment horizon of 90 days Third Harmonic Bio is expected to generate 0.82 times more return on investment than Instil Bio. However, Third Harmonic Bio is 1.22 times less risky than Instil Bio. It trades about 0.17 of its potential returns per unit of risk. Instil Bio is currently generating about -0.22 per unit of risk. If you would invest  1,272  in Third Harmonic Bio on August 13, 2024 and sell it today you would earn a total of  228.00  from holding Third Harmonic Bio or generate 17.92% return on investment over 90 days.

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

Third Harmonic Bio  vs.  Instil Bio

Third Harmonic Bio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Third Harmonic Bio are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Third Harmonic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Instil Bio

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Instil Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Third Harmonic and Instil Bio

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

The idea behind Third Harmonic Bio and Instil 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.