Correlation Between Xenetic Biosciences and Transcode Therapeutics

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

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

Diversification Opportunities for Xenetic Biosciences and Transcode Therapeutics

0.1

Correlation Coefficient

Xenetic Biosciences  Transcode Therapeutics

Average diversification

The 3 months correlation between Xenetic and Transcode is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xenetic Biosciences and Transcode Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcode Therapeutics and Xenetic 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 Xenetic Biosciences are associated (or correlated) with Transcode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcode Therapeutics has no effect on the direction of Xenetic Biosciences i.e., Xenetic Biosciences and Transcode Therapeutics go up and down completely randomly.

Pair Corralation between Xenetic Biosciences and Transcode Therapeutics

Given the investment horizon of 90 days Xenetic Biosciences is expected to under-perform the Transcode Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Xenetic Biosciences is 3.67 times less risky than Transcode Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Transcode Therapeutics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Transcode Therapeutics on July 26, 2024 and sell it today you would earn a total of  25.00  from holding Transcode Therapeutics or generate 59.52% return on investment over 90 days.

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

Xenetic Biosciences  vs.  Transcode Therapeutics

Xenetic Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xenetic Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Transcode Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transcode Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Transcode Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xenetic Biosciences and Transcode Therapeutics

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

The idea behind Xenetic Biosciences and Transcode 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..