Correlation Between Seres Therapeutics and HCW Biologics
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and HCW Biologics 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 HCW Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and HCW Biologics, you can compare the effects of market volatilities on Seres Therapeutics and HCW Biologics 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 HCW Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and HCW Biologics.
Diversification Opportunities for Seres Therapeutics and HCW Biologics
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seres and HCW is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and HCW Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCW Biologics 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 HCW Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCW Biologics has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and HCW Biologics go up and down completely randomly.
Pair Corralation between Seres Therapeutics and HCW Biologics
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 7.22 times less return on investment than HCW Biologics. But when comparing it to its historical volatility, Seres Therapeutics is 8.7 times less risky than HCW Biologics. It trades about 0.16 of its potential returns per unit of risk. HCW Biologics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 45.00 in HCW Biologics on August 29, 2024 and sell it today you would earn a total of 11.00 from holding HCW Biologics or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. HCW Biologics
Performance |
| Timeline |
| Seres Therapeutics |
| HCW Biologics |
Seres Therapeutics and HCW Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and HCW Biologics
The main advantage of trading using opposite Seres Therapeutics and HCW Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, HCW Biologics 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 HCW Biologics will offset losses from the drop in HCW Biologics' long position.| Seres Therapeutics vs. Syros Pharmaceuticals | Seres Therapeutics vs. Iovance Biotherapeutics | Seres Therapeutics vs. Veracyte | Seres Therapeutics vs. Fate Therapeutics |
| HCW Biologics vs. Eliem Therapeutics | HCW Biologics vs. Scpharmaceuticals | HCW Biologics vs. Milestone Pharmaceuticals | HCW Biologics vs. Seres 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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