Correlation Between CRISPR Therapeutics and PagSeguro Digital

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

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

Diversification Opportunities for CRISPR Therapeutics and PagSeguro Digital

0.46

Correlation Coefficient

CRISPR Therapeutics  PagSeguro Digital

Very weak diversification

The 3 months correlation between CRISPR and PagSeguro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CRISPR Therapeutics AG and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and CRISPR 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 CRISPR Therapeutics AG are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of CRISPR Therapeutics i.e., CRISPR Therapeutics and PagSeguro Digital go up and down completely randomly.

Pair Corralation between CRISPR Therapeutics and PagSeguro Digital

Assuming the 90 days trading horizon CRISPR Therapeutics AG is expected to generate 1.07 times more return on investment than PagSeguro Digital. However, CRISPR Therapeutics is 1.07 times more volatile than PagSeguro Digital. It trades about -0.24 of its potential returns per unit of risk. PagSeguro Digital is currently generating about -0.27 per unit of risk. If you would invest  3,728  in CRISPR Therapeutics AG on October 5, 2024 and sell it today you would lose (576.00) from holding CRISPR Therapeutics AG or give up 15.45% of portfolio value over 90 days.

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

CRISPR Therapeutics AG  vs.  PagSeguro Digital

CRISPR Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

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

PagSeguro Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PagSeguro Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CRISPR Therapeutics and PagSeguro Digital

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

The idea behind CRISPR Therapeutics AG and PagSeguro Digital 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.