Correlation Between Terns Pharmaceuticals and Sage Therapeutic
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals and Sage Therapeutic 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 Terns Pharmaceuticals and Sage Therapeutic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and Sage Therapeutic, you can compare the effects of market volatilities on Terns Pharmaceuticals and Sage Therapeutic 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 Terns Pharmaceuticals with a short position of Sage Therapeutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Sage Therapeutic.
Diversification Opportunities for Terns Pharmaceuticals and Sage Therapeutic
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Terns and Sage is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Sage Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Therapeutic and Terns Pharmaceuticals 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 Terns Pharmaceuticals are associated (or correlated) with Sage Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Therapeutic has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Sage Therapeutic go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Sage Therapeutic
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to generate 1.16 times more return on investment than Sage Therapeutic. However, Terns Pharmaceuticals is 1.16 times more volatile than Sage Therapeutic. It trades about 0.03 of its potential returns per unit of risk. Sage Therapeutic is currently generating about -0.1 per unit of risk. If you would invest 601.00 in Terns Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of 23.00 from holding Terns Pharmaceuticals or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Sage Therapeutic
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Sage Therapeutic |
Terns Pharmaceuticals and Sage Therapeutic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Sage Therapeutic
The main advantage of trading using opposite Terns Pharmaceuticals and Sage Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals position performs unexpectedly, Sage Therapeutic 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 Sage Therapeutic will offset losses from the drop in Sage Therapeutic's long position.| Terns Pharmaceuticals vs. Crinetics Pharmaceuticals | Terns Pharmaceuticals vs. Enanta Pharmaceuticals | Terns Pharmaceuticals vs. Amicus Therapeutics | Terns Pharmaceuticals vs. Connect Biopharma Holdings |
| Sage Therapeutic vs. Apellis Pharmaceuticals | Sage Therapeutic vs. Terns Pharmaceuticals | Sage Therapeutic vs. Day One Biopharmaceuticals | Sage Therapeutic vs. Blueprint Medicines Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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