Correlation Between Genmab AS and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Genmab AS and Terns Pharmaceuticals 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 Genmab AS and Terns Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genmab AS and Terns Pharmaceuticals, you can compare the effects of market volatilities on Genmab AS and Terns Pharmaceuticals 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 Genmab AS with a short position of Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genmab AS and Terns Pharmaceuticals.
Diversification Opportunities for Genmab AS and Terns Pharmaceuticals
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genmab and Terns is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals and Genmab AS 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 Genmab AS are associated (or correlated) with Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Genmab AS i.e., Genmab AS and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Genmab AS and Terns Pharmaceuticals
Given the investment horizon of 90 days Genmab AS is expected to under-perform the Terns Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Genmab AS is 2.74 times less risky than Terns Pharmaceuticals. The stock trades about -0.08 of its potential returns per unit of risk. The Terns Pharmaceuticals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,315 in Terns Pharmaceuticals on August 30, 2024 and sell it today you would lose (681.00) from holding Terns Pharmaceuticals or give up 51.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genmab AS vs. Terns Pharmaceuticals
Performance |
| Timeline |
| Genmab AS |
| Terns Pharmaceuticals |
Genmab AS and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genmab AS and Terns Pharmaceuticals
The main advantage of trading using opposite Genmab AS and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genmab AS position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.| Genmab AS vs. Ascendis Pharma AS | Genmab AS vs. Apellis Pharmaceuticals | Genmab AS vs. BeiGene | Genmab AS vs. Akero Therapeutics |
| Terns Pharmaceuticals vs. Amylyx Pharmaceuticals | Terns Pharmaceuticals vs. Acumen Pharmaceuticals | Terns Pharmaceuticals vs. Inozyme Pharma | Terns Pharmaceuticals vs. X4 Pharmaceuticals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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