Correlation Between Bicycle Therapeutics and Summit Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bicycle Therapeutics and Summit 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 Bicycle Therapeutics and Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bicycle Therapeutics and Summit Therapeutics PLC, you can compare the effects of market volatilities on Bicycle Therapeutics and Summit 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 Bicycle Therapeutics with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bicycle Therapeutics and Summit Therapeutics.
Diversification Opportunities for Bicycle Therapeutics and Summit Therapeutics
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bicycle and Summit is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bicycle Therapeutics and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC and Bicycle 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 Bicycle Therapeutics are associated (or correlated) with Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Bicycle Therapeutics i.e., Bicycle Therapeutics and Summit Therapeutics go up and down completely randomly.
Pair Corralation between Bicycle Therapeutics and Summit Therapeutics
Given the investment horizon of 90 days Bicycle Therapeutics is expected to generate 0.5 times more return on investment than Summit Therapeutics. However, Bicycle Therapeutics is 2.01 times less risky than Summit Therapeutics. It trades about -0.22 of its potential returns per unit of risk. Summit Therapeutics PLC is currently generating about -0.18 per unit of risk. If you would invest 1,304 in Bicycle Therapeutics on November 28, 2024 and sell it today you would lose (172.00) from holding Bicycle Therapeutics or give up 13.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bicycle Therapeutics vs. Summit Therapeutics PLC
Performance |
| Timeline |
| Bicycle Therapeutics |
| Summit Therapeutics PLC |
Bicycle Therapeutics and Summit Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bicycle Therapeutics and Summit Therapeutics
The main advantage of trading using opposite Bicycle Therapeutics and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bicycle Therapeutics position performs unexpectedly, Summit 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.| Bicycle Therapeutics vs. Ideaya Biosciences | Bicycle Therapeutics vs. AnaptysBio | Bicycle Therapeutics vs. MeiraGTx Holdings PLC | Bicycle Therapeutics vs. Keros Therapeutics |
| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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