Correlation Between Stoke Therapeutics and NextCure
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and NextCure 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 NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and NextCure, you can compare the effects of market volatilities on Stoke Therapeutics and NextCure 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 NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and NextCure.
Diversification Opportunities for Stoke Therapeutics and NextCure
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stoke and NextCure is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure 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 NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and NextCure go up and down completely randomly.
Pair Corralation between Stoke Therapeutics and NextCure
Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 1.31 times more return on investment than NextCure. However, Stoke Therapeutics is 1.31 times more volatile than NextCure. It trades about 0.0 of its potential returns per unit of risk. NextCure is currently generating about -0.01 per unit of risk. If you would invest 1,127 in Stoke Therapeutics on November 2, 2024 and sell it today you would lose (28.00) from holding Stoke Therapeutics or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoke Therapeutics vs. NextCure
Performance |
| Timeline |
| Stoke Therapeutics |
| NextCure |
Stoke Therapeutics and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoke Therapeutics and NextCure
The main advantage of trading using opposite Stoke Therapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.| Stoke Therapeutics vs. Surrozen | Stoke Therapeutics vs. Armata Pharmaceuticals | Stoke Therapeutics vs. Pasithea Therapeutics Corp | Stoke Therapeutics vs. Aditxt Inc |
| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
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 CEOs Directory module to screen CEOs from public companies around the world.
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