Correlation Between Seres Therapeutics and Connect Biopharma
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and Connect Biopharma 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 Seres Therapeutics and Connect Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and Connect Biopharma Holdings, you can compare the effects of market volatilities on Seres Therapeutics and Connect Biopharma 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 Seres Therapeutics with a short position of Connect Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Connect Biopharma.
Diversification Opportunities for Seres Therapeutics and Connect Biopharma
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seres and Connect is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Connect Biopharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connect Biopharma and Seres Therapeutics 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 Seres Therapeutics are associated (or correlated) with Connect Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connect Biopharma has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Connect Biopharma go up and down completely randomly.
Pair Corralation between Seres Therapeutics and Connect Biopharma
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 1.67 times more return on investment than Connect Biopharma. However, Seres Therapeutics is 1.67 times more volatile than Connect Biopharma Holdings. It trades about 0.14 of its potential returns per unit of risk. Connect Biopharma Holdings is currently generating about -0.06 per unit of risk. If you would invest 82.00 in Seres Therapeutics on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Seres Therapeutics or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. Connect Biopharma Holdings
Performance |
| Timeline |
| Seres Therapeutics |
| Connect Biopharma |
Seres Therapeutics and Connect Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and Connect Biopharma
The main advantage of trading using opposite Seres Therapeutics and Connect Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, Connect Biopharma 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 Connect Biopharma will offset losses from the drop in Connect Biopharma's long position.| Seres Therapeutics vs. Syros Pharmaceuticals | Seres Therapeutics vs. Iovance Biotherapeutics | Seres Therapeutics vs. Veracyte | Seres Therapeutics vs. Fate Therapeutics |
| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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