Correlation Between Design Therapeutics and Stoke Therapeutics
Can any of the company-specific risk be diversified away by investing in both Design Therapeutics and Stoke 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 Design Therapeutics and Stoke Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Therapeutics and Stoke Therapeutics, you can compare the effects of market volatilities on Design Therapeutics and Stoke 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 Design Therapeutics with a short position of Stoke Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and Stoke Therapeutics.
Diversification Opportunities for Design Therapeutics and Stoke Therapeutics
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Design and Stoke is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics and Design 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 Design Therapeutics are associated (or correlated) with Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and Stoke Therapeutics go up and down completely randomly.
Pair Corralation between Design Therapeutics and Stoke Therapeutics
Given the investment horizon of 90 days Design Therapeutics is expected to generate 6.39 times less return on investment than Stoke Therapeutics. But when comparing it to its historical volatility, Design Therapeutics is 1.01 times less risky than Stoke Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Stoke Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 716.00 in Stoke Therapeutics on August 24, 2024 and sell it today you would earn a total of 415.00 from holding Stoke Therapeutics or generate 57.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Design Therapeutics vs. Stoke Therapeutics
Performance |
| Timeline |
| Design Therapeutics |
| Stoke Therapeutics |
Design Therapeutics and Stoke Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design Therapeutics and Stoke Therapeutics
The main advantage of trading using opposite Design Therapeutics and Stoke Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design Therapeutics position performs unexpectedly, Stoke 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 Stoke Therapeutics will offset losses from the drop in Stoke Therapeutics' long position.| Design Therapeutics vs. Monte Rosa Therapeutics | Design Therapeutics vs. Werewolf Therapeutics | Design Therapeutics vs. Ikena Oncology | Design Therapeutics vs. Stoke Therapeutics |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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