Correlation Between Terns Pharmaceuticals and Stoke Therapeutics
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals and Stoke 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 Terns Pharmaceuticals and Stoke Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and Stoke Therapeutics, you can compare the effects of market volatilities on Terns Pharmaceuticals and Stoke 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 Terns Pharmaceuticals with a short position of Stoke Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Stoke Therapeutics.
Diversification Opportunities for Terns Pharmaceuticals and Stoke Therapeutics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Terns and Stoke is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics 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 Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Stoke Therapeutics go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Stoke Therapeutics
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to under-perform the Stoke Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Terns Pharmaceuticals is 1.8 times less risky than Stoke Therapeutics. The stock trades about -0.6 of its potential returns per unit of risk. The Stoke Therapeutics is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Stoke Therapeutics on October 20, 2024 and sell it today you would lose (194.00) from holding Stoke Therapeutics or give up 17.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Stoke Therapeutics
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Stoke Therapeutics |
Terns Pharmaceuticals and Stoke Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Stoke Therapeutics
The main advantage of trading using opposite Terns Pharmaceuticals and Stoke Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals position performs unexpectedly, Stoke 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 Stoke Therapeutics will offset losses from the drop in Stoke Therapeutics' long position.| Terns Pharmaceuticals vs. Amylyx Pharmaceuticals | Terns Pharmaceuticals vs. Acumen Pharmaceuticals | Terns Pharmaceuticals vs. Inozyme Pharma | Terns Pharmaceuticals vs. X4 Pharmaceuticals |
| Stoke Therapeutics vs. Adaptimmune Therapeutics Plc | Stoke Therapeutics vs. Black Diamond Therapeutics | Stoke Therapeutics vs. Relay Therapeutics | Stoke Therapeutics vs. Pliant Therapeutics |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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