Correlation Between Design Therapeutics and STRYKER

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

By analyzing existing cross correlation between Design Therapeutics and STRYKER P 3375, you can compare the effects of market volatilities on Design Therapeutics and STRYKER 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 STRYKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and STRYKER.

Diversification Opportunities for Design Therapeutics and STRYKER

0.48

Correlation Coefficient

Design Therapeutics  STRYKER

Very weak diversification

The 3 months correlation between Design and STRYKER is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and STRYKER P 3375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRYKER P 3375 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 STRYKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRYKER P 3375 has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and STRYKER go up and down completely randomly.

Pair Corralation between Design Therapeutics and STRYKER

Given the investment horizon of 90 days Design Therapeutics is expected to generate 21.19 times more return on investment than STRYKER. However, Design Therapeutics is 21.19 times more volatile than STRYKER P 3375. It trades about 0.02 of its potential returns per unit of risk. STRYKER P 3375 is currently generating about 0.02 per unit of risk. If you would invest  790.00  in Design Therapeutics on October 26, 2024 and sell it today you would lose (293.00) from holding Design Therapeutics or give up 37.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.37%
Values	Daily Returns

Design Therapeutics  vs.  STRYKER P 3375

Design Therapeutics

Risk-Adjusted Performance

0 of 100

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 very healthy technical and fundamental indicators, Design Therapeutics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

STRYKER P 3375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRYKER P 3375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Design Therapeutics and STRYKER

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

The idea behind Design Therapeutics and STRYKER P 3375 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.