Correlation Between Seres Therapeutics and Silence Therapeutics
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and Silence 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 Seres Therapeutics and Silence Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and Silence Therapeutics PLC, you can compare the effects of market volatilities on Seres Therapeutics and Silence 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 Seres Therapeutics with a short position of Silence Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Silence Therapeutics.
Diversification Opportunities for Seres Therapeutics and Silence Therapeutics
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seres and Silence is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Silence Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silence Therapeutics PLC 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 Silence Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silence Therapeutics PLC has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Silence Therapeutics go up and down completely randomly.
Pair Corralation between Seres Therapeutics and Silence Therapeutics
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 1.67 times more return on investment than Silence Therapeutics. However, Seres Therapeutics is 1.67 times more volatile than Silence Therapeutics PLC. It trades about 0.03 of its potential returns per unit of risk. Silence Therapeutics PLC is currently generating about -0.13 per unit of risk. If you would invest 114.00 in Seres Therapeutics on September 3, 2024 and sell it today you would lose (16.00) from holding Seres Therapeutics or give up 14.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. Silence Therapeutics PLC
Performance |
| Timeline |
| Seres Therapeutics |
| Silence Therapeutics PLC |
Seres Therapeutics and Silence Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and Silence Therapeutics
The main advantage of trading using opposite Seres Therapeutics and Silence Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, Silence 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 Silence Therapeutics will offset losses from the drop in Silence Therapeutics' long position.| Seres Therapeutics vs. DiaMedica Therapeutics | Seres Therapeutics vs. Lyra Therapeutics | Seres Therapeutics vs. Centessa Pharmaceuticals PLC |
| Silence Therapeutics vs. DiaMedica Therapeutics | Silence Therapeutics vs. Lyra Therapeutics | Silence Therapeutics vs. Centessa Pharmaceuticals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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