Correlation Between Connect Biopharma and Phathom Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Phathom Pharmaceuticals 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 Connect Biopharma and Phathom Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Phathom Pharmaceuticals, you can compare the effects of market volatilities on Connect Biopharma and Phathom Pharmaceuticals 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 Connect Biopharma with a short position of Phathom Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Phathom Pharmaceuticals.
Diversification Opportunities for Connect Biopharma and Phathom Pharmaceuticals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Connect and Phathom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Phathom Pharmaceuticals go up and down completely randomly.
Pair Corralation between Connect Biopharma and Phathom Pharmaceuticals
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to generate 1.36 times more return on investment than Phathom Pharmaceuticals. However, Connect Biopharma is 1.36 times more volatile than Phathom Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Phathom Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest 87.00 in Connect Biopharma Holdings on September 4, 2024 and sell it today you would earn a total of 24.00 from holding Connect Biopharma Holdings or generate 27.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Phathom Pharmaceuticals
Performance |
| Timeline |
| Connect Biopharma |
| Phathom Pharmaceuticals |
Connect Biopharma and Phathom Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Phathom Pharmaceuticals
The main advantage of trading using opposite Connect Biopharma and Phathom Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Phathom Pharmaceuticals 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 Phathom Pharmaceuticals will offset losses from the drop in Phathom Pharmaceuticals' long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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