Correlation Between AnaptysBio and Theseus Pharmaceuticals

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

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

Diversification Opportunities for AnaptysBio and Theseus Pharmaceuticals

0.6

Correlation Coefficient

AnaptysBio  Theseus Pharmaceuticals

Poor diversification

The 3 months correlation between AnaptysBio and Theseus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AnaptysBio and Theseus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theseus Pharmaceuticals 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 Theseus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theseus Pharmaceuticals has no effect on the direction of AnaptysBio i.e., AnaptysBio and Theseus Pharmaceuticals go up and down completely randomly.

Pair Corralation between AnaptysBio and Theseus Pharmaceuticals

Given the investment horizon of 90 days AnaptysBio is expected to generate 0.47 times more return on investment than Theseus Pharmaceuticals. However, AnaptysBio is 2.15 times less risky than Theseus Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Theseus Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  2,440  in AnaptysBio on October 10, 2024 and sell it today you would lose (1,004) from holding AnaptysBio or give up 41.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.01%
Values	Daily Returns

AnaptysBio  vs.  Theseus Pharmaceuticals

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.

Theseus Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Theseus Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Theseus Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AnaptysBio and Theseus Pharmaceuticals

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

The idea behind AnaptysBio and Theseus Pharmaceuticals 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.