Correlation Between Beam Therapeutics and Theseus Pharmaceuticals

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

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

Diversification Opportunities for Beam Therapeutics and Theseus Pharmaceuticals

-0.46

Correlation Coefficient

Beam Therapeutics  Theseus Pharmaceuticals

Very good diversification

The 3 months correlation between Beam and Theseus is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beam Therapeutics and Theseus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theseus Pharmaceuticals and Beam 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 Beam Therapeutics 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 Beam Therapeutics i.e., Beam Therapeutics and Theseus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Beam Therapeutics and Theseus Pharmaceuticals

Given the investment horizon of 90 days Beam Therapeutics is expected to generate 26.45 times less return on investment than Theseus Pharmaceuticals. But when comparing it to its historical volatility, Beam Therapeutics is 2.17 times less risky than Theseus Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Theseus Pharmaceuticals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Theseus Pharmaceuticals on September 20, 2024 and sell it today you would lose (127.00) from holding Theseus Pharmaceuticals or give up 25.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.43%
Values	Daily Returns

Beam Therapeutics  vs.  Theseus Pharmaceuticals

Beam Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

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

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 Beam Therapeutics and Theseus Pharmaceuticals

The main advantage of trading using opposite Beam Therapeutics and Theseus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beam Therapeutics 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 Beam Therapeutics 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.