Correlation Between Inozyme Pharma and Sera Prognostics

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

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

Diversification Opportunities for Inozyme Pharma and Sera Prognostics

0.15

Correlation Coefficient

Inozyme Pharma  Sera Prognostics

Average diversification

The 3 months correlation between Inozyme and Sera is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Inozyme Pharma and Sera Prognostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sera Prognostics and Inozyme Pharma 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 Inozyme Pharma are associated (or correlated) with Sera Prognostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sera Prognostics has no effect on the direction of Inozyme Pharma i.e., Inozyme Pharma and Sera Prognostics go up and down completely randomly.

Pair Corralation between Inozyme Pharma and Sera Prognostics

Given the investment horizon of 90 days Inozyme Pharma is expected to under-perform the Sera Prognostics. But the stock apears to be less risky and, when comparing its historical volatility, Inozyme Pharma is 1.02 times less risky than Sera Prognostics. The stock trades about -0.35 of its potential returns per unit of risk. The Sera Prognostics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  732.00  in Sera Prognostics on October 20, 2024 and sell it today you would lose (90.00) from holding Sera Prognostics or give up 12.3% of portfolio value over 90 days.

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

Inozyme Pharma  vs.  Sera Prognostics

Inozyme Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inozyme Pharma 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sera Prognostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sera Prognostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sera Prognostics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inozyme Pharma and Sera Prognostics

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

The idea behind Inozyme Pharma and Sera Prognostics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.