Correlation Between Seres Therapeutics and Verastem
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and Verastem 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 Verastem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and Verastem, you can compare the effects of market volatilities on Seres Therapeutics and Verastem 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 Verastem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Verastem.
Diversification Opportunities for Seres Therapeutics and Verastem
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seres and Verastem is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Verastem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verastem 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 Verastem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verastem has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Verastem go up and down completely randomly.
Pair Corralation between Seres Therapeutics and Verastem
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 0.81 times more return on investment than Verastem. However, Seres Therapeutics is 1.23 times less risky than Verastem. It trades about -0.12 of its potential returns per unit of risk. Verastem is currently generating about -0.27 per unit of risk. If you would invest 69.00 in Seres Therapeutics on January 13, 2025 and sell it today you would lose (10.00) from holding Seres Therapeutics or give up 14.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. Verastem
Performance |
| Timeline |
| Seres Therapeutics |
| Verastem |
Seres Therapeutics and Verastem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and Verastem
The main advantage of trading using opposite Seres Therapeutics and Verastem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, Verastem 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 Verastem will offset losses from the drop in Verastem's long position.| Seres Therapeutics vs. Iovance Biotherapeutics | Seres Therapeutics vs. Veracyte | Seres Therapeutics vs. Fate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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