Correlation Between Verastem and HAVN Life
Can any of the company-specific risk be diversified away by investing in both Verastem and HAVN 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 HAVN Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and HAVN Life Sciences, you can compare the effects of market volatilities on Verastem and HAVN 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 HAVN Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and HAVN Life.
Diversification Opportunities for Verastem and HAVN Life
Poor diversification
The 3 months correlation between Verastem and HAVN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN 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 HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of Verastem i.e., Verastem and HAVN Life go up and down completely randomly.
Pair Corralation between Verastem and HAVN Life
Given the investment horizon of 90 days Verastem is expected to generate 27.04 times less return on investment than HAVN Life. But when comparing it to its historical volatility, Verastem is 32.26 times less risky than HAVN Life. It trades about 0.25 of its potential returns per unit of risk. HAVN Life Sciences is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.01 in HAVN Life Sciences on September 2, 2024 and sell it today you would earn a total of 0.51 from holding HAVN Life Sciences or generate 5100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Verastem vs. HAVN Life Sciences
Performance |
| Timeline |
| Verastem |
| HAVN Life Sciences |
Verastem and HAVN Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and HAVN Life
The main advantage of trading using opposite Verastem and HAVN Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, HAVN 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 HAVN Life will offset losses from the drop in HAVN Life's long position.The idea behind Verastem and HAVN 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.| HAVN Life vs. Rigel Pharmaceuticals | HAVN Life vs. Geron | HAVN Life vs. Verastem | HAVN Life vs. Immutep Ltd ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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