Correlation Between Blueprint Medicines and Ascendis Pharma

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

By analyzing existing cross correlation between Blueprint Medicines Corp and Ascendis Pharma AS, you can compare the effects of market volatilities on Blueprint Medicines and Ascendis Pharma 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 Blueprint Medicines with a short position of Ascendis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and Ascendis Pharma.

Diversification Opportunities for Blueprint Medicines and Ascendis Pharma

-0.68

Correlation Coefficient

Blueprint Medicines  Ascendis Pharma

Excellent diversification

The 3 months correlation between Blueprint and Ascendis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Blueprint Medicines 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 Blueprint Medicines Corp are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Blueprint Medicines and Ascendis Pharma

Given the investment horizon of 90 days Blueprint Medicines is expected to generate 2.72 times less return on investment than Ascendis Pharma. In addition to that, Blueprint Medicines is 1.04 times more volatile than Ascendis Pharma AS. It trades about 0.03 of its total potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.08 per unit of volatility. If you would invest  13,648  in Ascendis Pharma AS on December 30, 2024 and sell it today you would earn a total of  1,820  from holding Ascendis Pharma AS or generate 13.34% return on investment over 90 days.

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

Blueprint Medicines Corp  vs.  Ascendis Pharma AS

Blueprint Medicines Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Blueprint Medicines is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Ascendis Pharma AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Pharma AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ascendis Pharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blueprint Medicines and Ascendis Pharma

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

The idea behind Blueprint Medicines Corp and Ascendis Pharma AS 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 CEOs Directory module to screen CEOs from public companies around the world.