Correlation Between Verastem and Sosei Group
Can any of the company-specific risk be diversified away by investing in both Verastem and Sosei Group 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 Sosei Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Sosei Group, you can compare the effects of market volatilities on Verastem and Sosei Group 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 Sosei Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Sosei Group.
Diversification Opportunities for Verastem and Sosei Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verastem and Sosei is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Sosei Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sosei Group 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 Sosei Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sosei Group has no effect on the direction of Verastem i.e., Verastem and Sosei Group go up and down completely randomly.
Pair Corralation between Verastem and Sosei Group
Given the investment horizon of 90 days Verastem is expected to generate 1.73 times more return on investment than Sosei Group. However, Verastem is 1.73 times more volatile than Sosei Group. It trades about 0.08 of its potential returns per unit of risk. Sosei Group is currently generating about -0.04 per unit of risk. If you would invest 379.00 in Verastem on September 3, 2024 and sell it today you would earn a total of 173.00 from holding Verastem or generate 45.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Verastem vs. Sosei Group
Performance |
| Timeline |
| Verastem |
| Sosei Group |
Verastem and Sosei Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Sosei Group
The main advantage of trading using opposite Verastem and Sosei Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, Sosei Group 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 Sosei Group will offset losses from the drop in Sosei Group's long position.The idea behind Verastem and Sosei Group 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.| Sosei Group vs. Gain Therapeutics | Sosei Group vs. Biovie Inc | Sosei Group vs. In8bio Inc | Sosei Group vs. NewAmsterdam 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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