Correlation Between Structure Therapeutics and Phathom Pharmaceuticals

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

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

Diversification Opportunities for Structure Therapeutics and Phathom Pharmaceuticals

0.78

Correlation Coefficient

Structure Therapeutics  Phathom Pharmaceuticals

Poor diversification

The 3 months correlation between Structure and Phathom is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Structure Therapeutics America and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals and Structure 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 Structure Therapeutics American are associated (or correlated) with Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of Structure Therapeutics i.e., Structure Therapeutics and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between Structure Therapeutics and Phathom Pharmaceuticals

Given the investment horizon of 90 days Structure Therapeutics American is expected to under-perform the Phathom Pharmaceuticals. In addition to that, Structure Therapeutics is 1.1 times more volatile than Phathom Pharmaceuticals. It trades about -0.01 of its total potential returns per unit of risk. Phathom Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  796.00  in Phathom Pharmaceuticals on September 7, 2024 and sell it today you would earn a total of  54.00  from holding Phathom Pharmaceuticals or generate 6.78% return on investment over 90 days.

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

Structure Therapeutics America  vs.  Phathom Pharmaceuticals

Structure Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Structure Therapeutics American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Structure Therapeutics is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Phathom Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phathom Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Structure Therapeutics and Phathom Pharmaceuticals

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

The idea behind Structure Therapeutics American and Phathom Pharmaceuticals 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 Anywhere module to track or share privately all of your investments from the convenience of any device.