Correlation Between AnaptysBio and Erasca

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

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

Diversification Opportunities for AnaptysBio and Erasca

0.38

Correlation Coefficient

AnaptysBio  Erasca

Weak diversification

The 3 months correlation between AnaptysBio and Erasca is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AnaptysBio and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and AnaptysBio 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 AnaptysBio are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of AnaptysBio i.e., AnaptysBio and Erasca go up and down completely randomly.

Pair Corralation between AnaptysBio and Erasca

Given the investment horizon of 90 days AnaptysBio is expected to under-perform the Erasca. In addition to that, AnaptysBio is 1.55 times more volatile than Erasca Inc. It trades about -0.14 of its total potential returns per unit of risk. Erasca Inc is currently generating about -0.11 per unit of volatility. If you would invest  267.00  in Erasca Inc on October 22, 2024 and sell it today you would lose (82.00) from holding Erasca Inc or give up 30.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AnaptysBio  vs.  Erasca Inc

AnaptysBio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AnaptysBio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Erasca Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erasca Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AnaptysBio and Erasca

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

The idea behind AnaptysBio and Erasca Inc 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.

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.