Correlation Between Scpharmaceuticals and Eterna Therapeutics
Can any of the company-specific risk be diversified away by investing in both Scpharmaceuticals and Eterna 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 Scpharmaceuticals and Eterna Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scpharmaceuticals and Eterna Therapeutics, you can compare the effects of market volatilities on Scpharmaceuticals and Eterna 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 Scpharmaceuticals with a short position of Eterna Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scpharmaceuticals and Eterna Therapeutics.
Diversification Opportunities for Scpharmaceuticals and Eterna Therapeutics
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scpharmaceuticals and Eterna is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Scpharmaceuticals and Eterna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eterna Therapeutics and Scpharmaceuticals 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 Scpharmaceuticals are associated (or correlated) with Eterna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eterna Therapeutics has no effect on the direction of Scpharmaceuticals i.e., Scpharmaceuticals and Eterna Therapeutics go up and down completely randomly.
Pair Corralation between Scpharmaceuticals and Eterna Therapeutics
Given the investment horizon of 90 days Scpharmaceuticals is expected to generate 0.64 times more return on investment than Eterna Therapeutics. However, Scpharmaceuticals is 1.57 times less risky than Eterna Therapeutics. It trades about -0.09 of its potential returns per unit of risk. Eterna Therapeutics is currently generating about -0.28 per unit of risk. If you would invest 456.00 in Scpharmaceuticals on August 30, 2024 and sell it today you would lose (82.00) from holding Scpharmaceuticals or give up 17.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scpharmaceuticals vs. Eterna Therapeutics
Performance |
| Timeline |
| Scpharmaceuticals |
| Eterna Therapeutics |
Scpharmaceuticals and Eterna Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scpharmaceuticals and Eterna Therapeutics
The main advantage of trading using opposite Scpharmaceuticals and Eterna Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scpharmaceuticals position performs unexpectedly, Eterna 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 Eterna Therapeutics will offset losses from the drop in Eterna Therapeutics' long position.| Scpharmaceuticals vs. Milestone Pharmaceuticals | Scpharmaceuticals vs. Oncolytics Biotech | Scpharmaceuticals vs. Seres Therapeutics | Scpharmaceuticals vs. DiaMedica Therapeutics |
| Eterna Therapeutics vs. Ikena Oncology | Eterna Therapeutics vs. Eliem Therapeutics | Eterna Therapeutics vs. HCW Biologics | Eterna Therapeutics vs. RenovoRx |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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