Correlation Between Response Oncology and Summit Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Response Oncology and Summit 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 Response Oncology and Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Response Oncology and Summit Therapeutics PLC, you can compare the effects of market volatilities on Response Oncology and Summit 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 Response Oncology with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Response Oncology and Summit Therapeutics.

Diversification Opportunities for Response Oncology and Summit Therapeutics

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Response and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Response Oncology and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC and Response Oncology 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 Response Oncology are associated (or correlated) with Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Response Oncology i.e., Response Oncology and Summit Therapeutics go up and down completely randomly.

Pair Corralation between Response Oncology and Summit Therapeutics

If you would invest  1,831  in Summit Therapeutics PLC on October 16, 2024 and sell it today you would lose (13.00) from holding Summit Therapeutics PLC or give up 0.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Response Oncology  vs.  Summit Therapeutics PLC

 Performance 
       Timeline  
Response Oncology 

Risk-Adjusted Performance

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Over the last 90 days Response Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Response Oncology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Summit Therapeutics PLC 

Risk-Adjusted Performance

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Over the last 90 days Summit Therapeutics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Response Oncology and Summit Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Response Oncology and Summit Therapeutics

The main advantage of trading using opposite Response Oncology and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Response Oncology position performs unexpectedly, Summit 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.
The idea behind Response Oncology and Summit Therapeutics PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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