Correlation Between Spero Therapeutics and Applied Therapeutics
Can any of the company-specific risk be diversified away by investing in both Spero Therapeutics and Applied 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 Spero Therapeutics and Applied Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spero Therapeutics and Applied Therapeutics, you can compare the effects of market volatilities on Spero Therapeutics and Applied 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 Spero Therapeutics with a short position of Applied Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spero Therapeutics and Applied Therapeutics.
Diversification Opportunities for Spero Therapeutics and Applied Therapeutics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spero and Applied is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Spero Therapeutics and Applied Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Therapeutics and Spero 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 Spero Therapeutics are associated (or correlated) with Applied Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Therapeutics has no effect on the direction of Spero Therapeutics i.e., Spero Therapeutics and Applied Therapeutics go up and down completely randomly.
Pair Corralation between Spero Therapeutics and Applied Therapeutics
Given the investment horizon of 90 days Spero Therapeutics is expected to under-perform the Applied Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Spero Therapeutics is 2.79 times less risky than Applied Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Applied Therapeutics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 335.00 in Applied Therapeutics on August 25, 2024 and sell it today you would earn a total of 628.00 from holding Applied Therapeutics or generate 187.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spero Therapeutics vs. Applied Therapeutics
Performance |
| Timeline |
| Spero Therapeutics |
| Applied Therapeutics |
Spero Therapeutics and Applied Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spero Therapeutics and Applied Therapeutics
The main advantage of trading using opposite Spero Therapeutics and Applied Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spero Therapeutics position performs unexpectedly, Applied 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 Applied Therapeutics will offset losses from the drop in Applied Therapeutics' long position.| Spero Therapeutics vs. Assembly Biosciences | Spero Therapeutics vs. Achilles Therapeutics PLC | Spero Therapeutics vs. Instil Bio | Spero Therapeutics vs. CytomX Therapeutics |
| Applied Therapeutics vs. X4 Pharmaceuticals | Applied Therapeutics vs. Terns Pharmaceuticals | Applied Therapeutics vs. Day One Biopharmaceuticals | Applied Therapeutics vs. Hookipa Pharma |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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