Correlation Between Axsome Therapeutics and Sarepta Therapeutics

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

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

Diversification Opportunities for Axsome Therapeutics and Sarepta Therapeutics

-0.01

Correlation Coefficient

Axsome Therapeutics  Sarepta Therapeutics

Good diversification

The 3 months correlation between Axsome and Sarepta is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Axsome Therapeutics and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics and Axsome 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 Axsome Therapeutics are associated (or correlated) with Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Axsome Therapeutics i.e., Axsome Therapeutics and Sarepta Therapeutics go up and down completely randomly.

Pair Corralation between Axsome Therapeutics and Sarepta Therapeutics

Given the investment horizon of 90 days Axsome Therapeutics is expected to generate 12.33 times less return on investment than Sarepta Therapeutics. But when comparing it to its historical volatility, Axsome Therapeutics is 1.21 times less risky than Sarepta Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Sarepta Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11,977  in Sarepta Therapeutics on October 5, 2024 and sell it today you would earn a total of  432.00  from holding Sarepta Therapeutics or generate 3.61% return on investment over 90 days.

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

Axsome Therapeutics  vs.  Sarepta Therapeutics

Axsome Therapeutics

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axsome Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Axsome Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sarepta Therapeutics

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sarepta Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sarepta Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Axsome Therapeutics and Sarepta Therapeutics

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

The idea behind Axsome Therapeutics and Sarepta Therapeutics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..