Correlation Between Crinetics Pharmaceuticals and Omeros

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

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

Diversification Opportunities for Crinetics Pharmaceuticals and Omeros

0.32

Correlation Coefficient

Crinetics Pharmaceuticals  Omeros

Weak diversification

The 3 months correlation between Crinetics and Omeros is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Crinetics Pharmaceuticals and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals are associated (or correlated) with Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Crinetics Pharmaceuticals i.e., Crinetics Pharmaceuticals and Omeros go up and down completely randomly.

Pair Corralation between Crinetics Pharmaceuticals and Omeros

Given the investment horizon of 90 days Crinetics Pharmaceuticals is expected to under-perform the Omeros. But the stock apears to be less risky and, when comparing its historical volatility, Crinetics Pharmaceuticals is 4.77 times less risky than Omeros. The stock trades about -0.02 of its potential returns per unit of risk. The Omeros is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Omeros on September 16, 2024 and sell it today you would earn a total of  88.00  from holding Omeros or generate 13.04% return on investment over 90 days.

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

Crinetics Pharmaceuticals  vs.  Omeros

Crinetics Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crinetics Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Crinetics Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Omeros

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crinetics Pharmaceuticals and Omeros

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

The idea behind Crinetics Pharmaceuticals and Omeros 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.