Correlation Between Erasca and Standard Biotools
Can any of the company-specific risk be diversified away by investing in both Erasca and Standard Biotools 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 Erasca and Standard Biotools into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Standard Biotools, you can compare the effects of market volatilities on Erasca and Standard Biotools 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 Erasca with a short position of Standard Biotools. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Standard Biotools.
Diversification Opportunities for Erasca and Standard Biotools
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erasca and Standard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Standard Biotools in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Biotools and Erasca 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 Erasca Inc are associated (or correlated) with Standard Biotools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Biotools has no effect on the direction of Erasca i.e., Erasca and Standard Biotools go up and down completely randomly.
Pair Corralation between Erasca and Standard Biotools
Given the investment horizon of 90 days Erasca is expected to generate 1.22 times less return on investment than Standard Biotools. But when comparing it to its historical volatility, Erasca Inc is 1.39 times less risky than Standard Biotools. It trades about 0.07 of its potential returns per unit of risk. Standard Biotools is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Standard Biotools on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Standard Biotools or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erasca Inc vs. Standard Biotools
Performance |
| Timeline |
| Erasca Inc |
| Standard Biotools |
Erasca and Standard Biotools Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and Standard Biotools
The main advantage of trading using opposite Erasca and Standard Biotools positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, Standard Biotools 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 Standard Biotools will offset losses from the drop in Standard Biotools' long position.| Erasca vs. Century Therapeutics | Erasca vs. Keros Therapeutics | Erasca vs. Monte Rosa Therapeutics | Erasca vs. Design Therapeutics |
| Standard Biotools vs. Star Equity Holdings | Standard Biotools vs. Biodesix | Standard Biotools vs. ENDRA Life Sciences | Standard Biotools vs. Fonar |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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