Correlation Between Legend Biotech and Protagonist Therapeutics
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Protagonist 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 Legend Biotech and Protagonist Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Biotech Corp and Protagonist Therapeutics, you can compare the effects of market volatilities on Legend Biotech and Protagonist 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 Legend Biotech with a short position of Protagonist Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Protagonist Therapeutics.
Diversification Opportunities for Legend Biotech and Protagonist Therapeutics
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legend and Protagonist is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Protagonist Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protagonist Therapeutics and Legend Biotech 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 Legend Biotech Corp are associated (or correlated) with Protagonist Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protagonist Therapeutics has no effect on the direction of Legend Biotech i.e., Legend Biotech and Protagonist Therapeutics go up and down completely randomly.
Pair Corralation between Legend Biotech and Protagonist Therapeutics
Given the investment horizon of 90 days Legend Biotech is expected to generate 19.84 times less return on investment than Protagonist Therapeutics. But when comparing it to its historical volatility, Legend Biotech Corp is 1.45 times less risky than Protagonist Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Protagonist Therapeutics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Protagonist Therapeutics on August 31, 2024 and sell it today you would earn a total of 3,361 from holding Protagonist Therapeutics or generate 296.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Legend Biotech Corp vs. Protagonist Therapeutics
Performance |
| Timeline |
| Legend Biotech Corp |
| Protagonist Therapeutics |
Legend Biotech and Protagonist Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Protagonist Therapeutics
The main advantage of trading using opposite Legend Biotech and Protagonist Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Protagonist 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 Protagonist Therapeutics will offset losses from the drop in Protagonist Therapeutics' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Protagonist Therapeutics vs. Revolution Medicines | Protagonist Therapeutics vs. Akero Therapeutics | Protagonist Therapeutics vs. Avidity Biosciences | Protagonist Therapeutics vs. Stoke Therapeutics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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