Correlation Between Immunitybio and Seres Therapeutics

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

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

Diversification Opportunities for Immunitybio and Seres Therapeutics

-0.03

Correlation Coefficient

Immunitybio  Seres Therapeutics

Good diversification

The 3 months correlation between Immunitybio and Seres is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Immunitybio and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Immunitybio 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 Immunitybio are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Immunitybio i.e., Immunitybio and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Immunitybio and Seres Therapeutics

Given the investment horizon of 90 days Immunitybio is expected to generate 1.33 times more return on investment than Seres Therapeutics. However, Immunitybio is 1.33 times more volatile than Seres Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Seres Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  268.00  in Immunitybio on December 30, 2024 and sell it today you would earn a total of  46.00  from holding Immunitybio or generate 17.16% return on investment over 90 days.

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

Immunitybio  vs.  Seres Therapeutics

Immunitybio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Immunitybio are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Immunitybio showed solid returns over the last few months and may actually be approaching a breakup point.

Seres Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seres Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Immunitybio and Seres Therapeutics

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

The idea behind Immunitybio and Seres 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.