Correlation Between PTC Therapeutics and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both PTC Therapeutics and Terns Pharmaceuticals 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 PTC Therapeutics and Terns Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTC Therapeutics and Terns Pharmaceuticals, you can compare the effects of market volatilities on PTC Therapeutics and Terns Pharmaceuticals 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 PTC Therapeutics with a short position of Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC Therapeutics and Terns Pharmaceuticals.
Diversification Opportunities for PTC Therapeutics and Terns Pharmaceuticals
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PTC and Terns is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PTC Therapeutics and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals and PTC 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 PTC Therapeutics are associated (or correlated) with Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of PTC Therapeutics i.e., PTC Therapeutics and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between PTC Therapeutics and Terns Pharmaceuticals
Given the investment horizon of 90 days PTC Therapeutics is expected to generate 0.93 times more return on investment than Terns Pharmaceuticals. However, PTC Therapeutics is 1.08 times less risky than Terns Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.24 per unit of risk. If you would invest 4,248 in PTC Therapeutics on August 24, 2024 and sell it today you would earn a total of 41.00 from holding PTC Therapeutics or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PTC Therapeutics vs. Terns Pharmaceuticals
Performance |
| Timeline |
| PTC Therapeutics |
| Terns Pharmaceuticals |
PTC Therapeutics and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTC Therapeutics and Terns Pharmaceuticals
The main advantage of trading using opposite PTC Therapeutics and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTC Therapeutics position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.| PTC Therapeutics vs. Krystal Biotech | PTC Therapeutics vs. Sarepta Therapeutics | PTC Therapeutics vs. Iovance Biotherapeutics | PTC Therapeutics vs. Madrigal Pharmaceuticals |
| Terns Pharmaceuticals vs. Lyra Therapeutics | Terns Pharmaceuticals vs. Hookipa Pharma | Terns Pharmaceuticals vs. Cingulate Warrants | Terns Pharmaceuticals vs. SAB Biotherapeutics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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