Correlation Between Stoke Therapeutics and Seres Therapeutics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and Seres 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 Stoke Therapeutics and Seres Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and Seres Therapeutics, you can compare the effects of market volatilities on Stoke Therapeutics and Seres 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 Stoke Therapeutics with a short position of Seres Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Seres Therapeutics.

Diversification Opportunities for Stoke Therapeutics and Seres Therapeutics

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Stoke and Seres is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Stoke 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 Stoke Therapeutics are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Stoke Therapeutics and Seres Therapeutics

Given the investment horizon of 90 days Stoke Therapeutics is expected to under-perform the Seres Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Stoke Therapeutics is 1.84 times less risky than Seres Therapeutics. The stock trades about -0.1 of its potential returns per unit of risk. The Seres Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Seres Therapeutics on September 5, 2024 and sell it today you would lose (8.00) from holding Seres Therapeutics or give up 8.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Stoke Therapeutics  vs.  Seres Therapeutics

 Performance 
       Timeline  
Stoke Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Seres Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Seres Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seres Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Stoke Therapeutics and Seres Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stoke Therapeutics and Seres Therapeutics

The main advantage of trading using opposite Stoke Therapeutics and Seres Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, Seres 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 Seres Therapeutics will offset losses from the drop in Seres Therapeutics' long position.
The idea behind Stoke Therapeutics and Seres Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Bonds Directory
Find actively traded corporate debentures issued by US companies
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency