Correlation Between Applied Therapeutics and Coherus BioSciences

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

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

Diversification Opportunities for Applied Therapeutics and Coherus BioSciences

0.84

Correlation Coefficient

Applied Therapeutics  Coherus BioSciences

Very poor diversification

The 3 months correlation between Applied and Coherus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Applied Therapeutics and Coherus BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherus BioSciences and Applied Therapeutics 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 Applied Therapeutics are associated (or correlated) with Coherus BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherus BioSciences has no effect on the direction of Applied Therapeutics i.e., Applied Therapeutics and Coherus BioSciences go up and down completely randomly.

Pair Corralation between Applied Therapeutics and Coherus BioSciences

Given the investment horizon of 90 days Applied Therapeutics is expected to generate 1.09 times more return on investment than Coherus BioSciences. However, Applied Therapeutics is 1.09 times more volatile than Coherus BioSciences. It trades about -0.1 of its potential returns per unit of risk. Coherus BioSciences is currently generating about -0.15 per unit of risk. If you would invest  82.00  in Applied Therapeutics on December 29, 2024 and sell it today you would lose (30.00) from holding Applied Therapeutics or give up 36.59% of portfolio value over 90 days.

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

Applied Therapeutics  vs.  Coherus BioSciences

Applied Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Coherus BioSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coherus BioSciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Pair Trading with Applied Therapeutics and Coherus BioSciences

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

The idea behind Applied Therapeutics and Coherus BioSciences 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.