Correlation Between WUXI BIOLOGICS and Seres Therapeutics
Can any of the company-specific risk be diversified away by investing in both WUXI BIOLOGICS and Seres 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 WUXI BIOLOGICS and Seres Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WUXI BIOLOGICS UNSPADR2 and Seres Therapeutics, you can compare the effects of market volatilities on WUXI BIOLOGICS and Seres 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 WUXI BIOLOGICS with a short position of Seres Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of WUXI BIOLOGICS and Seres Therapeutics.
Diversification Opportunities for WUXI BIOLOGICS and Seres Therapeutics
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WUXI and Seres is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WUXI BIOLOGICS UNSPADR2 and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and WUXI BIOLOGICS 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 WUXI BIOLOGICS UNSPADR2 are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of WUXI BIOLOGICS i.e., WUXI BIOLOGICS and Seres Therapeutics go up and down completely randomly.
Pair Corralation between WUXI BIOLOGICS and Seres Therapeutics
Assuming the 90 days trading horizon WUXI BIOLOGICS is expected to generate 2.71 times less return on investment than Seres Therapeutics. But when comparing it to its historical volatility, WUXI BIOLOGICS UNSPADR2 is 2.17 times less risky than Seres Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Seres Therapeutics is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Seres Therapeutics on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Seres Therapeutics or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WUXI BIOLOGICS UNSPADR2 vs. Seres Therapeutics
Performance |
| Timeline |
| WUXI BIOLOGICS UNSPADR2 |
| Seres Therapeutics |
WUXI BIOLOGICS and Seres Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WUXI BIOLOGICS and Seres Therapeutics
The main advantage of trading using opposite WUXI BIOLOGICS and Seres Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WUXI BIOLOGICS position performs unexpectedly, Seres 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 Seres Therapeutics will offset losses from the drop in Seres Therapeutics' long position.| WUXI BIOLOGICS vs. National Health Investors | WUXI BIOLOGICS vs. GUARDANT HEALTH CL | WUXI BIOLOGICS vs. AGF Management Limited | WUXI BIOLOGICS vs. CVS Health |
| Seres Therapeutics vs. Perseus Mining Limited | Seres Therapeutics vs. SOUTHWEST AIRLINES | Seres Therapeutics vs. DISTRICT METALS | Seres Therapeutics vs. CHINA TONTINE WINES |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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