Correlation Between Axsome Therapeutics and TG Therapeutics
Can any of the company-specific risk be diversified away by investing in both Axsome Therapeutics and TG 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 Axsome Therapeutics and TG Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axsome Therapeutics and TG Therapeutics, you can compare the effects of market volatilities on Axsome Therapeutics and TG 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 Axsome Therapeutics with a short position of TG Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axsome Therapeutics and TG Therapeutics.
Diversification Opportunities for Axsome Therapeutics and TG Therapeutics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axsome and TGTX is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Axsome Therapeutics and TG Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TG Therapeutics and Axsome Therapeutics 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 Axsome Therapeutics are associated (or correlated) with TG Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TG Therapeutics has no effect on the direction of Axsome Therapeutics i.e., Axsome Therapeutics and TG Therapeutics go up and down completely randomly.
Pair Corralation between Axsome Therapeutics and TG Therapeutics
Given the investment horizon of 90 days Axsome Therapeutics is expected to generate 1.16 times more return on investment than TG Therapeutics. However, Axsome Therapeutics is 1.16 times more volatile than TG Therapeutics. It trades about 0.24 of its potential returns per unit of risk. TG Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 8,732 in Axsome Therapeutics on November 3, 2024 and sell it today you would earn a total of 1,914 from holding Axsome Therapeutics or generate 21.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axsome Therapeutics vs. TG Therapeutics
Performance |
| Timeline |
| Axsome Therapeutics |
| TG Therapeutics |
Axsome Therapeutics and TG Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axsome Therapeutics and TG Therapeutics
The main advantage of trading using opposite Axsome Therapeutics and TG Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axsome Therapeutics position performs unexpectedly, TG 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 TG Therapeutics will offset losses from the drop in TG Therapeutics' long position.| Axsome Therapeutics vs. Incyte | Axsome Therapeutics vs. Sarepta Therapeutics | Axsome Therapeutics vs. ACADIA Pharmaceuticals | Axsome Therapeutics vs. Viking Therapeutics |
| TG Therapeutics vs. Madrigal Pharmaceuticals | TG Therapeutics vs. Terns Pharmaceuticals | TG Therapeutics vs. Hepion Pharmaceuticals | TG Therapeutics vs. Exelixis |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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