Correlation Between Design Therapeutics and SIMON

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

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

Diversification Opportunities for Design Therapeutics and SIMON

0.48

Correlation Coefficient

Design Therapeutics  SIMON

Very weak diversification

The 3 months correlation between Design and SIMON is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and Design 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 Design Therapeutics are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and SIMON go up and down completely randomly.

Pair Corralation between Design Therapeutics and SIMON

Given the investment horizon of 90 days Design Therapeutics is expected to under-perform the SIMON. In addition to that, Design Therapeutics is 5.07 times more volatile than SIMON PPTY GROUP. It trades about -0.06 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.02 per unit of volatility. If you would invest  8,969  in SIMON PPTY GROUP on December 22, 2024 and sell it today you would earn a total of  62.00  from holding SIMON PPTY GROUP or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

Design Therapeutics  vs.  SIMON PPTY GROUP

Design Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Design Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SIMON PPTY GROUP

Risk-Adjusted Performance

Weak

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

Pair Trading with Design Therapeutics and SIMON

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

The idea behind Design Therapeutics and SIMON PPTY GROUP 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.