Correlation Between ESSA Pharma and Ikena Oncology
Can any of the company-specific risk be diversified away by investing in both ESSA Pharma and Ikena Oncology 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 ESSA Pharma and Ikena Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Pharma and Ikena Oncology, you can compare the effects of market volatilities on ESSA Pharma and Ikena Oncology 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 ESSA Pharma with a short position of Ikena Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Pharma and Ikena Oncology.
Diversification Opportunities for ESSA Pharma and Ikena Oncology
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ESSA and Ikena is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Pharma and Ikena Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikena Oncology and ESSA Pharma 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 ESSA Pharma are associated (or correlated) with Ikena Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikena Oncology has no effect on the direction of ESSA Pharma i.e., ESSA Pharma and Ikena Oncology go up and down completely randomly.
Pair Corralation between ESSA Pharma and Ikena Oncology
Given the investment horizon of 90 days ESSA Pharma is expected to generate 0.93 times more return on investment than Ikena Oncology. However, ESSA Pharma is 1.08 times less risky than Ikena Oncology. It trades about -0.08 of its potential returns per unit of risk. Ikena Oncology is currently generating about -0.19 per unit of risk. If you would invest 176.00 in ESSA Pharma on November 28, 2024 and sell it today you would lose (6.00) from holding ESSA Pharma or give up 3.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Pharma vs. Ikena Oncology
Performance |
| Timeline |
| ESSA Pharma |
| Ikena Oncology |
ESSA Pharma and Ikena Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Pharma and Ikena Oncology
The main advantage of trading using opposite ESSA Pharma and Ikena Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Pharma position performs unexpectedly, Ikena Oncology 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 Ikena Oncology will offset losses from the drop in Ikena Oncology's long position.| ESSA Pharma vs. Summit Therapeutics PLC | ESSA Pharma vs. Avenue Therapeutics | ESSA Pharma vs. Spero Therapeutics |
| Ikena Oncology vs. Edgewise Therapeutics | Ikena Oncology vs. Design Therapeutics | Ikena Oncology vs. Xilio Development | Ikena Oncology vs. Monte Rosa Therapeutics |
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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