Correlation Between GH Research and Stoke Therapeutics
Can any of the company-specific risk be diversified away by investing in both GH Research and Stoke 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 Stoke 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 Stoke Therapeutics, you can compare the effects of market volatilities on GH Research and Stoke 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 Stoke Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GH Research and Stoke Therapeutics.
Diversification Opportunities for GH Research and Stoke Therapeutics
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GHRS and Stoke is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke 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 Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of GH Research i.e., GH Research and Stoke Therapeutics go up and down completely randomly.
Pair Corralation between GH Research and Stoke Therapeutics
Given the investment horizon of 90 days GH Research is expected to generate 4.02 times less return on investment than Stoke Therapeutics. But when comparing it to its historical volatility, GH Research PLC is 1.31 times less risky than Stoke Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Stoke Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 830.00 in Stoke Therapeutics on September 3, 2024 and sell it today you would earn a total of 381.00 from holding Stoke Therapeutics or generate 45.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GH Research PLC vs. Stoke Therapeutics
Performance |
| Timeline |
| GH Research PLC |
| Stoke Therapeutics |
GH Research and Stoke Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GH Research and Stoke Therapeutics
The main advantage of trading using opposite GH Research and Stoke Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GH Research position performs unexpectedly, Stoke 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 Stoke Therapeutics will offset losses from the drop in Stoke Therapeutics' long position.| GH Research vs. DiaMedica Therapeutics | GH Research vs. Lyra Therapeutics | GH Research vs. Centessa Pharmaceuticals PLC |
| Stoke Therapeutics vs. DiaMedica Therapeutics | Stoke Therapeutics vs. Lyra Therapeutics | Stoke Therapeutics vs. Centessa Pharmaceuticals PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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