Correlation Between Clearside Biomedical and Paratek Pharmaceuticals

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

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

Diversification Opportunities for Clearside Biomedical and Paratek Pharmaceuticals

-0.56

Correlation Coefficient

Clearside Biomedical  Paratek Pharmaceuticals

Excellent diversification

The 3 months correlation between Clearside and Paratek is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Clearside Biomedical and Paratek Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paratek Pharmaceuticals and Clearside Biomedical 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 Clearside Biomedical are associated (or correlated) with Paratek Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paratek Pharmaceuticals has no effect on the direction of Clearside Biomedical i.e., Clearside Biomedical and Paratek Pharmaceuticals go up and down completely randomly.

Pair Corralation between Clearside Biomedical and Paratek Pharmaceuticals

If you would invest  100.00  in Clearside Biomedical on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Clearside Biomedical or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Clearside Biomedical  vs.  Paratek Pharmaceuticals

Clearside Biomedical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clearside Biomedical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Clearside Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Paratek Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paratek Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Paratek Pharmaceuticals is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Clearside Biomedical and Paratek Pharmaceuticals

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

The idea behind Clearside Biomedical and Paratek 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.