Correlation Between Verastem and Galera Therapeutics
Can any of the company-specific risk be diversified away by investing in both Verastem and Galera 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 Verastem and Galera Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Galera Therapeutics, you can compare the effects of market volatilities on Verastem and Galera 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 Verastem with a short position of Galera Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Galera Therapeutics.
Diversification Opportunities for Verastem and Galera Therapeutics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Verastem and Galera is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Galera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galera Therapeutics 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 Galera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galera Therapeutics has no effect on the direction of Verastem i.e., Verastem and Galera Therapeutics go up and down completely randomly.
Pair Corralation between Verastem and Galera Therapeutics
Given the investment horizon of 90 days Verastem is expected to generate 2.05 times less return on investment than Galera Therapeutics. In addition to that, Verastem is 1.54 times more volatile than Galera Therapeutics. It trades about 0.03 of its total potential returns per unit of risk. Galera Therapeutics is currently generating about 0.09 per unit of volatility. If you would invest 166.00 in Galera Therapeutics on August 28, 2024 and sell it today you would earn a total of 92.00 from holding Galera Therapeutics or generate 55.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.78% |
| Values | Daily Returns |
Verastem vs. Galera Therapeutics
Performance |
| Timeline |
| Verastem |
| Galera Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Verastem and Galera Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Galera Therapeutics
The main advantage of trading using opposite Verastem and Galera Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, Galera 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 Galera Therapeutics will offset losses from the drop in Galera Therapeutics' long position.The idea behind Verastem and Galera Therapeutics 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.| Galera Therapeutics vs. Mereo BioPharma Group | Galera Therapeutics vs. Terns Pharmaceuticals | Galera Therapeutics vs. PDS Biotechnology Corp | Galera Therapeutics vs. Inozyme Pharma |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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