Correlation Between Erasca and Replimune
Can any of the company-specific risk be diversified away by investing in both Erasca and Replimune 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 Replimune into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Replimune Group, you can compare the effects of market volatilities on Erasca and Replimune 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 Replimune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Replimune.
Diversification Opportunities for Erasca and Replimune
Good diversification
The 3 months correlation between Erasca and Replimune is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Replimune Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Replimune Group 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 Replimune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Replimune Group has no effect on the direction of Erasca i.e., Erasca and Replimune go up and down completely randomly.
Pair Corralation between Erasca and Replimune
Given the investment horizon of 90 days Erasca Inc is expected to under-perform the Replimune. But the stock apears to be less risky and, when comparing its historical volatility, Erasca Inc is 1.39 times less risky than Replimune. The stock trades about -0.01 of its potential returns per unit of risk. The Replimune Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,029 in Replimune Group on August 25, 2024 and sell it today you would earn a total of 465.00 from holding Replimune Group or generate 45.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erasca Inc vs. Replimune Group
Performance |
| Timeline |
| Erasca Inc |
| Replimune Group |
Erasca and Replimune Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and Replimune
The main advantage of trading using opposite Erasca and Replimune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, Replimune 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 Replimune will offset losses from the drop in Replimune's long position.| Erasca vs. Eliem Therapeutics | Erasca vs. HCW Biologics | Erasca vs. RenovoRx | Erasca vs. Tempest Therapeutics |
| Replimune vs. Nuvalent | Replimune vs. Ventyx Biosciences | Replimune vs. Ascendis Pharma AS | Replimune vs. United 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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