Correlation Between Alkermes Plc and Deciphera Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Alkermes Plc and Deciphera Pharmaceuticals 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 Alkermes Plc and Deciphera Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkermes Plc and Deciphera Pharmaceuticals LLC, you can compare the effects of market volatilities on Alkermes Plc and Deciphera Pharmaceuticals 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 Alkermes Plc with a short position of Deciphera Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkermes Plc and Deciphera Pharmaceuticals.

Diversification Opportunities for Alkermes Plc and Deciphera Pharmaceuticals

0.0

Correlation Coefficient

Alkermes Plc  Deciphera Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Alkermes and Deciphera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alkermes Plc and Deciphera Pharmaceuticals LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deciphera Pharmaceuticals and Alkermes Plc 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 Alkermes Plc are associated (or correlated) with Deciphera Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deciphera Pharmaceuticals has no effect on the direction of Alkermes Plc i.e., Alkermes Plc and Deciphera Pharmaceuticals go up and down completely randomly.

Pair Corralation between Alkermes Plc and Deciphera Pharmaceuticals

If you would invest  2,878  in Alkermes Plc on December 30, 2024 and sell it today you would earn a total of  443.00  from holding Alkermes Plc or generate 15.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alkermes Plc  vs.  Deciphera Pharmaceuticals LLC

Alkermes Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Alkermes Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Deciphera Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deciphera Pharmaceuticals LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Deciphera Pharmaceuticals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alkermes Plc and Deciphera Pharmaceuticals

The main advantage of trading using opposite Alkermes Plc and Deciphera Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkermes Plc position performs unexpectedly, Deciphera Pharmaceuticals 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 Deciphera Pharmaceuticals will offset losses from the drop in Deciphera Pharmaceuticals' long position.

The idea behind Alkermes Plc and Deciphera Pharmaceuticals LLC 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.