Correlation Between United Therapeutics and PTC Therapeutics
Can any of the company-specific risk be diversified away by investing in both United Therapeutics and PTC 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 United Therapeutics and PTC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Therapeutics and PTC Therapeutics, you can compare the effects of market volatilities on United Therapeutics and PTC 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 United Therapeutics with a short position of PTC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Therapeutics and PTC Therapeutics.
Diversification Opportunities for United Therapeutics and PTC Therapeutics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and PTC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Therapeutics and PTC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Therapeutics and United 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 United Therapeutics are associated (or correlated) with PTC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Therapeutics has no effect on the direction of United Therapeutics i.e., United Therapeutics and PTC Therapeutics go up and down completely randomly.
Pair Corralation between United Therapeutics and PTC Therapeutics
Given the investment horizon of 90 days United Therapeutics is expected to generate 0.74 times more return on investment than PTC Therapeutics. However, United Therapeutics is 1.34 times less risky than PTC Therapeutics. It trades about -0.13 of its potential returns per unit of risk. PTC Therapeutics is currently generating about -0.25 per unit of risk. If you would invest 31,787 in United Therapeutics on January 9, 2025 and sell it today you would lose (2,509) from holding United Therapeutics or give up 7.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Therapeutics vs. PTC Therapeutics
Performance |
| Timeline |
| United Therapeutics |
| PTC Therapeutics |
United Therapeutics and PTC Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Therapeutics and PTC Therapeutics
The main advantage of trading using opposite United Therapeutics and PTC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Therapeutics position performs unexpectedly, PTC 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 PTC Therapeutics will offset losses from the drop in PTC Therapeutics' long position.| United Therapeutics vs. Incyte | United Therapeutics vs. Alnylam Pharmaceuticals | United Therapeutics vs. Ultragenyx | United Therapeutics vs. Apellis Pharmaceuticals |
| PTC Therapeutics vs. Krystal Biotech | PTC Therapeutics vs. Sarepta Therapeutics | PTC Therapeutics vs. Iovance Biotherapeutics | PTC Therapeutics vs. Madrigal 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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