Correlation Between I Mab and Summit Therapeutics
Can any of the company-specific risk be diversified away by investing in both I Mab 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 I Mab and Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Mab and Summit Therapeutics PLC, you can compare the effects of market volatilities on I Mab 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 I Mab with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Mab and Summit Therapeutics.
Diversification Opportunities for I Mab and Summit Therapeutics
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IMAB and Summit is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding I Mab 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 I Mab 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 I Mab 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 I Mab i.e., I Mab and Summit Therapeutics go up and down completely randomly.
Pair Corralation between I Mab and Summit Therapeutics
Given the investment horizon of 90 days I Mab is expected to under-perform the Summit Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, I Mab is 1.41 times less risky than Summit Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Summit Therapeutics PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,747 in Summit Therapeutics PLC on November 5, 2024 and sell it today you would earn a total of 251.00 from holding Summit Therapeutics PLC or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Mab vs. Summit Therapeutics PLC
Performance |
| Timeline |
| I Mab |
| Summit Therapeutics PLC |
I Mab and Summit Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Mab and Summit Therapeutics
The main advantage of trading using opposite I Mab and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Mab 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.The idea behind I Mab and Summit Therapeutics PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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