Correlation Between Scholar Rock and Armata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Scholar Rock and Armata 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 Scholar Rock and Armata Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholar Rock Holding and Armata Pharmaceuticals, you can compare the effects of market volatilities on Scholar Rock and Armata 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 Scholar Rock with a short position of Armata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholar Rock and Armata Pharmaceuticals.
Diversification Opportunities for Scholar Rock and Armata Pharmaceuticals
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Scholar and Armata is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Scholar Rock Holding and Armata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armata Pharmaceuticals and Scholar Rock 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 Scholar Rock Holding are associated (or correlated) with Armata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armata Pharmaceuticals has no effect on the direction of Scholar Rock i.e., Scholar Rock and Armata Pharmaceuticals go up and down completely randomly.
Pair Corralation between Scholar Rock and Armata Pharmaceuticals
Given the investment horizon of 90 days Scholar Rock Holding is expected to generate 4.5 times more return on investment than Armata Pharmaceuticals. However, Scholar Rock is 4.5 times more volatile than Armata Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Armata Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 1,880 in Scholar Rock Holding on August 25, 2024 and sell it today you would earn a total of 1,112 from holding Scholar Rock Holding or generate 59.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholar Rock Holding vs. Armata Pharmaceuticals
Performance |
| Timeline |
| Scholar Rock Holding |
| Armata Pharmaceuticals |
Scholar Rock and Armata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholar Rock and Armata Pharmaceuticals
The main advantage of trading using opposite Scholar Rock and Armata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholar Rock position performs unexpectedly, Armata 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 Armata Pharmaceuticals will offset losses from the drop in Armata Pharmaceuticals' long position.| Scholar Rock vs. Revolution Medicines | Scholar Rock vs. Black Diamond Therapeutics | Scholar Rock vs. Passage Bio | Scholar Rock vs. Monte Rosa Therapeutics |
| Armata Pharmaceuticals vs. Eliem Therapeutics | Armata Pharmaceuticals vs. HCW Biologics | Armata Pharmaceuticals vs. Scpharmaceuticals | Armata Pharmaceuticals vs. Milestone Pharmaceuticals |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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