Correlation Between Apellis Pharmaceuticals and Phathom Pharmaceuticals

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Phathom Pharmaceuticals

0.69

Correlation Coefficient

Apellis Pharmaceuticals  Phathom Pharmaceuticals

Poor diversification

The 3 months correlation between Apellis and Phathom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals and Apellis Pharmaceuticals 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 Apellis Pharmaceuticals are associated (or correlated) with Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Phathom Pharmaceuticals

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to under-perform the Phathom Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Apellis Pharmaceuticals is 1.82 times less risky than Phathom Pharmaceuticals. The stock trades about -0.12 of its potential returns per unit of risk. The Phathom Pharmaceuticals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Phathom Pharmaceuticals on December 29, 2024 and sell it today you would lose (140.00) from holding Phathom Pharmaceuticals or give up 17.5% of portfolio value over 90 days.

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

Apellis Pharmaceuticals  vs.  Phathom Pharmaceuticals

Apellis Pharmaceuticals

Risk-Adjusted Performance

Very Weak

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

Phathom Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phathom Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apellis Pharmaceuticals and Phathom Pharmaceuticals

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

The idea behind Apellis Pharmaceuticals and Phathom 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.