Correlation Between Sarepta Therapeutics and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Sarepta 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 Sarepta 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 Sarepta Therapeutics and Terns Pharmaceuticals, you can compare the effects of market volatilities on Sarepta 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 Sarepta Therapeutics with a short position of Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarepta Therapeutics and Terns Pharmaceuticals.
Diversification Opportunities for Sarepta Therapeutics and Terns Pharmaceuticals
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sarepta and Terns is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals and Sarepta 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 Sarepta 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 Sarepta Therapeutics i.e., Sarepta Therapeutics and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Sarepta Therapeutics and Terns Pharmaceuticals
Given the investment horizon of 90 days Sarepta Therapeutics is expected to generate 0.62 times more return on investment than Terns Pharmaceuticals. However, Sarepta Therapeutics is 1.6 times less risky than Terns Pharmaceuticals. It trades about -0.22 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.53 per unit of risk. If you would invest 12,409 in Sarepta Therapeutics on November 2, 2024 and sell it today you would lose (964.00) from holding Sarepta Therapeutics or give up 7.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarepta Therapeutics vs. Terns Pharmaceuticals
Performance |
| Timeline |
| Sarepta Therapeutics |
| Terns Pharmaceuticals |
Sarepta Therapeutics and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarepta Therapeutics and Terns Pharmaceuticals
The main advantage of trading using opposite Sarepta Therapeutics and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarepta 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.| Sarepta Therapeutics vs. Krystal Biotech | Sarepta Therapeutics vs. PTC Therapeutics | Sarepta Therapeutics vs. Iovance Biotherapeutics | Sarepta Therapeutics vs. Madrigal Pharmaceuticals |
| Terns Pharmaceuticals vs. Collegium Pharmaceutical | Terns Pharmaceuticals vs. Phibro Animal Health | Terns Pharmaceuticals vs. ANI Pharmaceuticals | Terns Pharmaceuticals vs. Procaps Group SA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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