Correlation Between Intercept Pharmaceuticals and Seres Therapeutics

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

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

Diversification Opportunities for Intercept Pharmaceuticals and Seres Therapeutics

0.48

Correlation Coefficient

Intercept Pharmaceuticals  Seres Therapeutics

Very weak diversification

The 3 months correlation between Intercept and Seres is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Intercept Pharmaceuticals and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Intercept Pharmaceuticals 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 Intercept Pharmaceuticals 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 Intercept Pharmaceuticals i.e., Intercept Pharmaceuticals and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Intercept Pharmaceuticals and Seres Therapeutics

If you would invest  78.00  in Seres Therapeutics on September 3, 2024 and sell it today you would earn a total of  15.00  from holding Seres Therapeutics or generate 19.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Intercept Pharmaceuticals  vs.  Seres Therapeutics

Intercept Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercept Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intercept Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Seres Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seres Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Seres Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intercept Pharmaceuticals and Seres Therapeutics

The main advantage of trading using opposite Intercept Pharmaceuticals and Seres Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercept Pharmaceuticals 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 Intercept Pharmaceuticals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.