Correlation Between Geron and Verastem
Can any of the company-specific risk be diversified away by investing in both Geron and Verastem 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 Geron and Verastem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geron and Verastem, you can compare the effects of market volatilities on Geron and Verastem 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 Geron with a short position of Verastem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geron and Verastem.
Diversification Opportunities for Geron and Verastem
Very good diversification
The 3 months correlation between Geron and Verastem is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Geron and Verastem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verastem and Geron 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 Geron are associated (or correlated) with Verastem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verastem has no effect on the direction of Geron i.e., Geron and Verastem go up and down completely randomly.
Pair Corralation between Geron and Verastem
Given the investment horizon of 90 days Geron is expected to under-perform the Verastem. But the stock apears to be less risky and, when comparing its historical volatility, Geron is 1.77 times less risky than Verastem. The stock trades about -0.2 of its potential returns per unit of risk. The Verastem is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Verastem on November 28, 2024 and sell it today you would earn a total of 292.00 from holding Verastem or generate 116.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geron vs. Verastem
Performance |
| Timeline |
| Geron |
| Verastem |
Geron and Verastem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geron and Verastem
The main advantage of trading using opposite Geron and Verastem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geron position performs unexpectedly, Verastem 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 Verastem will offset losses from the drop in Verastem's long position.| Geron vs. Viking Therapeutics | Geron vs. TG Therapeutics | Geron vs. X4 Pharmaceuticals | Geron vs. PDS Biotechnology Corp |
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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