Correlation Between GMO Internet and Summit Therapeutics
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Summit 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 GMO Internet and Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Summit Therapeutics PLC, you can compare the effects of market volatilities on GMO Internet and Summit 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 GMO Internet with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Summit Therapeutics.
Diversification Opportunities for GMO Internet and Summit Therapeutics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMO and Summit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC and GMO Internet 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 GMO Internet are associated (or correlated) with Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of GMO Internet i.e., GMO Internet and Summit Therapeutics go up and down completely randomly.
Pair Corralation between GMO Internet and Summit Therapeutics
Assuming the 90 days horizon GMO Internet is expected to under-perform the Summit Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, GMO Internet is 2.57 times less risky than Summit Therapeutics. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Summit Therapeutics PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,783 in Summit Therapeutics PLC on October 14, 2024 and sell it today you would earn a total of 2.00 from holding Summit Therapeutics PLC or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GMO Internet vs. Summit Therapeutics PLC
Performance |
| Timeline |
| GMO Internet |
| Summit Therapeutics PLC |
GMO Internet and Summit Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Summit Therapeutics
The main advantage of trading using opposite GMO Internet and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Summit 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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