Correlation Between Vigil Neuroscience and Connect Biopharma

Can any of the company-specific risk be diversified away by investing in both Vigil Neuroscience and Connect Biopharma 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 Vigil Neuroscience and Connect Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vigil Neuroscience and Connect Biopharma Holdings, you can compare the effects of market volatilities on Vigil Neuroscience and Connect Biopharma 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 Vigil Neuroscience with a short position of Connect Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vigil Neuroscience and Connect Biopharma.

Diversification Opportunities for Vigil Neuroscience and Connect Biopharma

-0.04

Correlation Coefficient

Vigil Neuroscience  Connect Biopharma

Good diversification

The 3 months correlation between Vigil and Connect is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vigil Neuroscience and Connect Biopharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connect Biopharma and Vigil Neuroscience 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 Vigil Neuroscience are associated (or correlated) with Connect Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connect Biopharma has no effect on the direction of Vigil Neuroscience i.e., Vigil Neuroscience and Connect Biopharma go up and down completely randomly.

Pair Corralation between Vigil Neuroscience and Connect Biopharma

Given the investment horizon of 90 days Vigil Neuroscience is expected to generate 52.64 times less return on investment than Connect Biopharma. But when comparing it to its historical volatility, Vigil Neuroscience is 1.13 times less risky than Connect Biopharma. It trades about 0.0 of its potential returns per unit of risk. Connect Biopharma Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Connect Biopharma Holdings on August 13, 2024 and sell it today you would earn a total of  38.00  from holding Connect Biopharma Holdings or generate 51.35% return on investment over 90 days.

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

Vigil Neuroscience  vs.  Connect Biopharma Holdings

Vigil Neuroscience

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vigil Neuroscience are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Vigil Neuroscience disclosed solid returns over the last few months and may actually be approaching a breakup point.

Connect Biopharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Connect Biopharma Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Connect Biopharma may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vigil Neuroscience and Connect Biopharma

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

The idea behind Vigil Neuroscience and Connect Biopharma Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.