Correlation Between Homology Medicines and Ascendis Pharma

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

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

Diversification Opportunities for Homology Medicines and Ascendis Pharma

-0.27

Correlation Coefficient

Homology Medicines  Ascendis Pharma

Very good diversification

The 3 months correlation between Homology and Ascendis is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Homology Medicines and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Homology Medicines 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 Homology Medicines are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Homology Medicines i.e., Homology Medicines and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Homology Medicines and Ascendis Pharma

If you would invest  13,207  in Ascendis Pharma AS on October 6, 2024 and sell it today you would earn a total of  833.00  from holding Ascendis Pharma AS or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Homology Medicines  vs.  Ascendis Pharma AS

Homology Medicines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ascendis Pharma AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Pharma AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ascendis Pharma is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Homology Medicines and Ascendis Pharma

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

The idea behind Homology Medicines and Ascendis Pharma AS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.