Correlation Between GH Research and Relay Therapeutics
Can any of the company-specific risk be diversified away by investing in both GH Research and Relay 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 GH Research and Relay Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GH Research PLC and Relay Therapeutics, you can compare the effects of market volatilities on GH Research and Relay 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 GH Research with a short position of Relay Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GH Research and Relay Therapeutics.
Diversification Opportunities for GH Research and Relay Therapeutics
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GHRS and Relay is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Relay Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relay Therapeutics and GH Research 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 GH Research PLC are associated (or correlated) with Relay Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relay Therapeutics has no effect on the direction of GH Research i.e., GH Research and Relay Therapeutics go up and down completely randomly.
Pair Corralation between GH Research and Relay Therapeutics
Given the investment horizon of 90 days GH Research PLC is expected to generate 3.55 times more return on investment than Relay Therapeutics. However, GH Research is 3.55 times more volatile than Relay Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Relay Therapeutics is currently generating about -0.32 per unit of risk. If you would invest 969.00 in GH Research PLC on December 1, 2024 and sell it today you would earn a total of 44.00 from holding GH Research PLC or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GH Research PLC vs. Relay Therapeutics
Performance |
| Timeline |
| GH Research PLC |
| Relay Therapeutics |
GH Research and Relay Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GH Research and Relay Therapeutics
The main advantage of trading using opposite GH Research and Relay Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GH Research position performs unexpectedly, Relay 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 Relay Therapeutics will offset losses from the drop in Relay Therapeutics' long position.| GH Research vs. Molecular Partners AG | GH Research vs. MediciNova | GH Research vs. Anebulo Pharmaceuticals | GH Research vs. Champions Oncology |
| Relay Therapeutics vs. Stoke Therapeutics | Relay Therapeutics vs. Pliant Therapeutics | Relay Therapeutics vs. Black Diamond Therapeutics | Relay Therapeutics vs. Arvinas |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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