Correlation Between Verastem and Awakn Life
Can any of the company-specific risk be diversified away by investing in both Verastem and Awakn Life 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 Verastem and Awakn Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Awakn Life Sciences, you can compare the effects of market volatilities on Verastem and Awakn Life 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 Verastem with a short position of Awakn Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Awakn Life.
Diversification Opportunities for Verastem and Awakn Life
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Verastem and Awakn is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Awakn Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awakn Life Sciences and Verastem 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 Verastem are associated (or correlated) with Awakn Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awakn Life Sciences has no effect on the direction of Verastem i.e., Verastem and Awakn Life go up and down completely randomly.
Pair Corralation between Verastem and Awakn Life
Given the investment horizon of 90 days Verastem is expected to generate 2.26 times less return on investment than Awakn Life. But when comparing it to its historical volatility, Verastem is 1.69 times less risky than Awakn Life. It trades about 0.04 of its potential returns per unit of risk. Awakn Life Sciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Awakn Life Sciences on September 3, 2024 and sell it today you would lose (17.50) from holding Awakn Life Sciences or give up 67.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verastem vs. Awakn Life Sciences
Performance |
| Timeline |
| Verastem |
| Awakn Life Sciences |
Verastem and Awakn Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Awakn Life
The main advantage of trading using opposite Verastem and Awakn Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, Awakn Life 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 Awakn Life will offset losses from the drop in Awakn Life's long position.The idea behind Verastem and Awakn Life Sciences 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.| Awakn Life vs. Nova Mentis Life | Awakn Life vs. PsyBio Therapeutics Corp | Awakn Life vs. HAVN Life Sciences | Awakn Life vs. Cellectis SA |
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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