Correlation Between Gain Therapeutics and Spero Therapeutics

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

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

Diversification Opportunities for Gain Therapeutics and Spero Therapeutics

0.4

Correlation Coefficient

Gain Therapeutics  Spero Therapeutics

Very weak diversification

The 3 months correlation between Gain and Spero is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gain Therapeutics and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics and Gain 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 Gain Therapeutics are associated (or correlated) with Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Gain Therapeutics i.e., Gain Therapeutics and Spero Therapeutics go up and down completely randomly.

Pair Corralation between Gain Therapeutics and Spero Therapeutics

Given the investment horizon of 90 days Gain Therapeutics is expected to generate 1.95 times more return on investment than Spero Therapeutics. However, Gain Therapeutics is 1.95 times more volatile than Spero Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Spero Therapeutics is currently generating about -0.14 per unit of risk. If you would invest  279.00  in Gain Therapeutics on October 20, 2024 and sell it today you would lose (51.00) from holding Gain Therapeutics or give up 18.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Gain Therapeutics  vs.  Spero Therapeutics

Gain Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Spero Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gain Therapeutics and Spero Therapeutics

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

The idea behind Gain Therapeutics and Spero Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.