Correlation Between Summit Therapeutics and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Summit Therapeutics and Park Electrochemical 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 Summit Therapeutics and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Therapeutics PLC and Park Electrochemical, you can compare the effects of market volatilities on Summit Therapeutics and Park Electrochemical 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 Summit Therapeutics with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Therapeutics and Park Electrochemical.
Diversification Opportunities for Summit Therapeutics and Park Electrochemical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and Park is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Summit 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 Summit Therapeutics PLC are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Summit Therapeutics i.e., Summit Therapeutics and Park Electrochemical go up and down completely randomly.
Pair Corralation between Summit Therapeutics and Park Electrochemical
Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 2.91 times more return on investment than Park Electrochemical. However, Summit Therapeutics is 2.91 times more volatile than Park Electrochemical. It trades about 0.28 of its potential returns per unit of risk. Park Electrochemical is currently generating about 0.1 per unit of risk. If you would invest 1,821 in Summit Therapeutics PLC on October 28, 2024 and sell it today you would earn a total of 555.00 from holding Summit Therapeutics PLC or generate 30.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Therapeutics PLC vs. Park Electrochemical
Performance |
| Timeline |
| Summit Therapeutics PLC |
| Park Electrochemical |
Summit Therapeutics and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Therapeutics and Park Electrochemical
The main advantage of trading using opposite Summit Therapeutics and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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