Correlation Between Gain Therapeutics and UroGen Pharma

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

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

Diversification Opportunities for Gain Therapeutics and UroGen Pharma

0.11

Correlation Coefficient

Gain Therapeutics  UroGen Pharma

Average diversification

The 3 months correlation between Gain and UroGen is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gain Therapeutics and UroGen Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UroGen Pharma 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 UroGen Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UroGen Pharma has no effect on the direction of Gain Therapeutics i.e., Gain Therapeutics and UroGen Pharma go up and down completely randomly.

Pair Corralation between Gain Therapeutics and UroGen Pharma

Given the investment horizon of 90 days Gain Therapeutics is expected to generate 3.06 times less return on investment than UroGen Pharma. In addition to that, Gain Therapeutics is 1.88 times more volatile than UroGen Pharma. It trades about 0.01 of its total potential returns per unit of risk. UroGen Pharma is currently generating about 0.06 per unit of volatility. If you would invest  1,052  in UroGen Pharma on December 28, 2024 and sell it today you would earn a total of  93.00  from holding UroGen Pharma or generate 8.84% return on investment over 90 days.

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

Gain Therapeutics  vs.  UroGen Pharma

Gain Therapeutics

Risk-Adjusted Performance

Modest

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.

UroGen Pharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UroGen Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, UroGen Pharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gain Therapeutics and UroGen Pharma

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

The idea behind Gain Therapeutics and UroGen Pharma 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.